Leveraging Training
Skills Development in
SMEs
AN ANALYSIS OF CANTERBURY REGION, NEW
ZEALAND
Paul Dalziel
Leveraging Training
Skills Development in SMEs
AN ANALYSIS OF CANTERBURY REGION, NEW ZEALAND
4 – ABOUT THE OECD
About the OECD
The Organisation for Economic Co-operation and Development (OECD) is a unique forum where the
governments of 30 market democracies work together to address the economic, social and governance
challenges of globalisation as well as to exploit its opportunities. The OECD’s way of working consists
of a highly effective process that begins with data collection and analysis and moves on to collective
discussion of policy, then decision-making and implementation. Mutual examination by governments,
multilateral surveillance and peer pressure to conform or reform are at the heart of OECD effectiveness.
Much of the material collected and analysed at the OECD is published on paper or online; from press
releases and regular compilations of data and projections to one-time publications or monographs on
particular issues; from economic surveys of each member country to regular reviews of education
systems, science and technology policies or environmental performance. For more information on the
OECD, please visit www.oecd.org/about.
About LEED
The OECD Programme on Local Economic and Employment Development (LEED) has advised
government and communities since 1982 on how to respond to economic change and tackle complex
problems in a fast-changing world. It draws on a comparative analysis of experience from some
50 countries in the Americas, Asia, Australasia and Europe in fostering economic growth, employment
and inclusion. For more information on the LEED Programme, please visit www.oecd.org/cfe/leed.
Note on the author
This country report was prepared by Paul Dalziel, who is Professor of Economics and Director of the
Regional Development research programme at the AERU Research Centre, Lincoln University, New
Zealand. Professor Dalziel’s research focuses on New Zealand economic and social policy. He is
currently the President of the Australia and New Zealand Regional Science Association International
(ANZRSAI).
The views contained in this report are those of the author and do not necessarily represent those of
the OECD or its member governments. For further information, please contact the author:
paul.dalziel@lincoln.ac.nz
ISSN 2079-4797 (PDF)
OECD Local Economic and Employment Development (LEED) Working Paper Series
This report is part of a series of working papers from the OECD Local Economic and Employment Development
(LEED) Programme. The LEED Programme identifies, analyses and disseminates innovative ideas for local
development, governance and the social economy. Governments from OECD member and non-member economies
look to LEED and work through it to generate innovative guidance on policies to support employment creation and
economic development through locally based initiatives.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
PREFACE – 5
PREFACE
Access to training and the effective utilisation of skills in Small and Medium-Sized Enterprises
(SMEs) has long been an area of interest to public policy makers and economic development
practitioners. SMEs often lack capabilities and infrastructure to make the most of their human
capabilities – and as a consequence tend to have lower levels of training and skills development. It is
against this back drop that the Department of Labour initiated this study with the OECD in conjunction
with the Ministry of Economic Development, Tertiary Education Commission, Industry Training
Federation and Business New Zealand. These organisations have a strong desire to see the results of the
study feed into responses to help lift the performance of SMEs.
New Zealand is the first of five countries to participate in the OECD project on Leveraging Training
and Skills Development in SMEs. Canterbury has been chosen as a case study region on account of its
relatively well-connected firms and education and training providers. The Canterbury Employers’
Chamber of Commerce and several development agencies and training providers have given valuable
input to the study. The study highlights the diversity of education and training provision and the fact that
SMEs upgrade skills through a number of different means. There is a strong link between training and
innovative firms – highlighting the potential for SMEs to improve New Zealand’s economic
performance.
Informal skills acquisition is an important contributor to firm performance – yet this area is not well
understood. The results of this aspect of the study raise some important questions. For example, can
skills formation in SMEs be increased through ways other than formal tertiary education and training?
How could business planning activities, for example, be used to reinforce a more systematic approach to
skills development in SMEs? What are the appropriate roles of Government and industry associations in
designing and delivering more flexible SME-centred business support, information, and training
packages?
The New Zealand country report provides an important body of knowledge to help untap the
economic potential of SMEs. Other recent studies, such as “Management Matters” and the analysis of
NZ firm dynamics also provide important evidence on which to base public policy responses and firm
strategies. The insights from this study, combined with the international comparisons from the other
participating OECD countries, will provide a valuable source of knowledge to help fulfil the potential of
SMEs.
Paul Barker, Department of Labour
Convenor, NZ Country Study Steering Group
June 2010
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
6 – ACKNOWLEDGEMENTS
ACKNOWLEDGEMENTS
The author is grateful to the many people who have helped with the research for this report. Sylvain
Giguère and Cristina Martinez-Fernandez at the OECD designed the methods used in the research as part
of a wider international project, while their colleague Damian Garnys implemented the web-based
survey. Sheelagh Delf, Helen Easton and Damian Garnys prepared the document for publication. The
international project is conducted under the direction of Cristina Martinez-Fernandez.
The national steering committee in New Zealand was made up of representatives from several
agencies, including Anne Alkema, Jeremy Baker, Paul Barker, Ron Clink, Lis Cowey, Daniel Haines,
Nyk Huntington, Carrie Murdoch, Paul Swallow, Barbara Tebbs, Jason Timmins, Tony Waldegrave and
Felicity Wong. In Canterbury, Phil Agnew, Tafflyn Bradford-James, Rob Brawley, Mike Gorinski,
Andrea Miller, Gay Sharlotte, Wendy Smith, Janine Sundberg, Peter Townsend, Tamara Weyman and
Simon Worthington made important contributions to the survey and to the successful hosting of a
regional skills ecosystem workshop in Christchurch. Che Tibby provided insightful comments on an
early draft of this report.
The whole research team is very grateful to the people who participated in the web-based survey, to
all the participants in the skills ecosystem workshop, and to the managers who made themselves
available to be interviewed for the five case studies: Tim Armitage, Howard Nicholls, David O’Neill,
Matt Southorn and Grahame Wright. We also thank Budd Lister at the Department of Labour for
preparing the collage on the cover, which includes a photo kindly supplied by Windflow Technology
Ltd, one of the five firms that participated as a case study for this project. Finally, I am very grateful to
my colleagues in the AERU, Teresa Cunningham, Meike Guenther, Bill Kaye-Blake and Caroline
Saunders for their help at different stages of the project.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
TABLE OF CONTENTS – 7
Table of Contents
Introduction ............................................................................................................................................ 11 PART I SKILLS DEVELOPMENT IN SMES.................................................................................... 15 Chapter 1 – The OECD Survey of Canterbury SMEs ........................................................................ 17 1.1 1.2 1.3 1.4 1.5 Skills training/learning reported by the firms ........................................................................... 21 Benefits and barriers to formal skills training ........................................................................... 26 Benefits and barriers to informal alternative skills training ...................................................... 32 Motivation and collaboration for skills training........................................................................ 40 Skills training and "green skills" ............................................................................................... 43 PART II THE REGIONAL SKILLS AND TRAINING ECOSYSTEM IN CANTERBURY ........ 45 Chapter 2 – The OECD Workshop in Christchurch........................................................................... 47 2.1 2.2 2.3 2.4 2.5 Skill needs ................................................................................................................................. 48 Training and competence building in SMEs ............................................................................. 49 Role of training networks.......................................................................................................... 50 Outcomes of training and competence building activities ........................................................ 52 Summary ................................................................................................................................... 53 Chapter 3 – The Canterbury SME Case Studies ................................................................................. 55 3.1 3.2 3.3 3.4 3.5 EFI Engineering Ltd ................................................................................................................. 55 Independent Line Services Ltd ................................................................................................. 57 Windflow Technology Ltd ........................................................................................................ 58 Alchemy Group Ltd .................................................................................................................. 59 Lakewood Court Rest Home and Straven House ...................................................................... 61 PART III ANALYSIS OF MAJOR THEMES AND CONCLUSIONS ............................................ 63 Chapter 4 – Major Themes.................................................................................................................... 65 4.1 4.2 4.3 4.4 Innovation and training ............................................................................................................. 65 Training issues in SMEs ........................................................................................................... 69 The importance of informal alternative ways of training .......................................................... 70 Other issues from this research ................................................................................................. 73 Chapter 5 – Conclusions ........................................................................................................................ 75 5.1 5.2 General conclusions .................................................................................................................. 76 Possible implications for policy development and further research ......................................... 76 References ............................................................................................................................................... 79 Appendix: National Data on Enterprise Training ............................................................................... 81
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
8 – TABLE OF CONTENTS
List of Tables
Table 1.
Table 2.
Table 3.
Table 4.
Table 5.
Table 6.
Table A1.
Table A2.
Table A3.
Table A4.
Table A5.
Table A6.
Table A7.
Enterprises by number of employees .................................................................................. 12
Motivations for participation in formal and informal training ............................................ 41
Number of reported types of training collaboration ........................................................... 43
Responses from 16 firms about .......................................................................................... 44
The SMEs interviewed as case studies ............................................................................... 55
Dominant areas of training in the survey ............................................................................ 70
Involvement of firms in training staff in the previous financial year ................................. 83
Three most important skills for respondent’s enterprise..................................................... 85
Forms of training offered or supported ............................................................................... 85
Types of skills training offered or supported ...................................................................... 86
Proportion of training that is formal (i.e. assessed), 2007 .................................................. 87
Three most important reasons for supporting less or no training ....................................... 88
Participants in the skills and training ecosystem workshop ................................................ 89
List of Figures
Figure 1.
Figure 2.
Figure 3.
Figure 4.
Figure 5.
Figure 6.
Figure 7.
Figure 8.
Figure 9.
Figure 10.
Figure 11.
Figure 12.
Figure 13.
Figure 14.
Figure 15.
Figure 16.
Figure 17.
Responding enterprises by industry sector ......................................................................... 17
Responding enterprises by number of employees .............................................................. 18
Occupation distribution of employees ................................................................................ 19
Age distribution of employees ............................................................................................ 19
Responding enterprises by number of apprentices or trainees ............................................ 20
Innovations in the previous year ......................................................................................... 21
Training and career development plans .............................................................................. 22
Total annual budget for training ......................................................................................... 22
Total annual training budget by size of enterprise .............................................................. 23
Changes in employment in the last twelve months ............................................................. 24
Changes in training in the last twelve months .................................................................... 24
Additional training in the next twelve months .................................................................... 26
Number of identified training areas .................................................................................... 26
Participation in formal training in the last twelve months .................................................. 28
Benefits to the firm of formal training ................................................................................ 29
Benefits to the industry and region of formal training ........................................................ 29
Was there desired training not carried out? ........................................................................ 30
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
TABLE OF CONTENTS – 9
Figure 18. Barriers for medium to high skilled employee training ...................................................... 31
Figure 19. Barriers for low skilled employee training ......................................................................... 31
Figure 20. Participation in informal training in the last twelve months ............................................... 33
Figure 21. Highly important sources of informal training in the last twelve months........................... 34
Figure 22. Percentage of staff involved in informal training ............................................................... 35
Figure 23. Percentage of participants in informal training ................................................................... 35
Figure 24. Improved skills from informal training............................................................................... 36
Figure 25. Other employee benefits from informal training ................................................................ 37
Figure 26. Benefits to the firm of informal training ............................................................................. 38
Figure 27. Benefits to the industry and region of informal training..................................................... 38
Figure 28. Better sources than formal education (medium to high skilled employees) ....................... 39
Figure 29. Better sources than formal education (low skilled employees) .......................................... 40
Figure 30. Motivations for participation in formal training ................................................................. 42
Figure 31. Motivations for participation in informal training .............................................................. 42
Figure 32. A high skill ecosystem ........................................................................................................ 47
Figure 33. Training arrangements for high and low innovation firms ................................................. 66
Figure 34. Age structure of high and low innovation firms ................................................................. 66
Figure 35. Types of formal training in high and low innovation firms ................................................ 67
Figure 36. Types of informal training in high and low innovation firms ............................................. 67
Figure 37. Sources of informal training in high and low innovation firms .......................................... 68
Figure 38. Participation in formal and informal training in the last twelve months ............................ 72
Figure 39. Benefits to the firm of formal and informal training .......................................................... 73
Figure A1. Factors resulting in staff not having all the skills to do their job, ....................................... 82
Figure A2. Skills that existing staff most need to improve ................................................................... 82
Figure A3. Staff training for skills in the previous financial year......................................................... 83
Figure A4. Providers of training used by respondents .......................................................................... 86
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
INTRODUCTION – 11
Introduction
New Zealand’s post-war economic development in the twentieth century was largely based on
exporting agricultural commodities (especially sheep meat, wool and dairy products) to the United
Kingdom, while an extensive system of import licensing was used to maintain foreign exchange reserves
and protect domestic light manufacturing. This was no longer sustainable after the United Kingdom
entered the European Economic Community in 1973, despite initial efforts to protect producers through
greater government controls. The need for change was recognised after a new government was elected in
July 1984. Reforms introduced over the following decade reduced the role of the public sector in the
economy and opened up domestic markets to greater local and international competition. Since then,
government policy has aimed to promote economic development through market-oriented innovation and
a more productive labour force. In the Speech from the Throne at the State Opening of Parliament on 9
December 2008, for example, the Governor General described the driving goal of the new government in
the following terms 1 :
My Government intends to embrace New Zealand’s clear opportunities for
improved economic performance and to use them to deliver better wages and
living conditions for all New Zealanders. It commits to, amongst other steps, an
ongoing programme of personal tax reductions; a step-up in infrastructure
investment; a reduction in government bureaucracy in favour of frontline
services; an across-the-board commitment to lifting productivity growth and a
renewed effort to lift education standards.
The goals of raising productivity growth and education standards are established priorities in public
policy (Barker, 2007). The New Zealand Treasury, for example, has a substantial work programme on
productivity growth, beginning with its influential report, Putting Productivity First, published in April
2008. That report identified five key drivers of productivity growth (p. 8): enterprise, innovation, skills,
investment and natural resources. This framework has been accepted by other lead organisations;
Business New Zealand, for example, has used it to create a 50-point productivity action plan in their
publication Setting New Zealand Apart – Getting More Productive and Competitive – A Plan for Action.
The government’s draft Tertiary Education Strategy 2010-2015, released in October 2009, targeted four
of its six priorities to increasing the number of people achieving higher-level qualifications as well as
assisting adult learners to gain literacy, language and numeracy skills which lead to higher-level study or
skilled employment.
A key element in recent policy initiatives aims to increase skills levels in the existing labour force, on
the basis that 80% of those currently employed will still be in the workforce in 2020 (New Zealand
Government, 2008, p. 6). Effective policies to support training and skills development in the workforce
must take into account that New Zealand businesses are predominantly small and medium-sized
enterprises, or SMEs (Long et al, 2000; Coetzer, 2002; Vaughan, 2002; Fraser, 2005; TEC, 2005;
Coetzer, 2007; Coetzer et al, 2007; Massey and Ingley, 2007). Two-thirds of New Zealand enterprises
have zero employees, and almost two-thirds of businesses which do employ staff have no more than five
employees (MED, 2009). The New Zealand Centre for SME Research describes these firms as "micro
1
www.beehive.govt.nz/speech/speech+throne+0
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
12 – INTRODUCTION
enterprises"; see, for example, Cameron and Massey, 1999). Table 1 presents data on the distribution of
employing enterprises as at February 2008 – more than 90% employ between 1 and 19 employees, and
only 1.4% employ 100 staff or more.
Table 1. Number of employing enterprises by number of employees, February 2008
Employee
Size Group
Number
of
Enterprises
Percentage of All Enterprises with
Employees
Cumulative
Percentage
1-5
100,459
66.2
66.2
6-9
20,526
13.5
79.8
10-19
16,771
11.1
90.8
20-49
9,104
6.0
96.8
50-99
2,579
1.7
98.5
100-499
1,859
1.2
99.8
500+
340
0.2
100.0
TOTAL
151,638
100.0
Source: MED (2009, p. 9).
This feature of the New Zealand economy, which is shared by other economies, is significant
because there is considerable evidence that small and medium-sized enterprises generally face significant
barriers to engagement with formal training programmes (see Coetzer, 2002, p. 4). These barriers have
been summarised as follows in the extensive literature review of Vaughan (2002,
pp. 7-8):
•
A preoccupation with short-term survival issues takes priority over training which is long-term
in planning requirements and benefit realisation.
•
Skill deficiencies tend to be solved with the labour market by employing previously trained
staff.
•
Training is oriented to large enterprises and their needs, yet small to medium-sized enterprises
are not scaled-down versions of large ones, in terms of characteristics, organisation, and daily
operation.
•
Informal and on-the-job, unstructured training is seen as more relevant than training through
formal courses.
•
Financial costs are disproportionately higher for SMEs than large enterprises.
•
SME employers tend to be independent and suspicious of formal training and education.
•
Opportunity costs preclude the release of staff for training, or the provision of “cover” for
employees in training.
•
There is conflicting evidence about demonstrable benefits in terms of profit and growth from
training to the SME itself; benefits tend to be most clearly seen in terms of the individual
employee or the economy generally.
•
Formal training is often not flexible enough in timing, access, or convenience for SMEs.
•
Customisation of training packages, which would make training more convenient and relevant
for SMEs, is expensive.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
INTRODUCTION – 13
Data across OECD countries show that small to medium sized enterprises (SMEs) participate 50%
less in training activities than large firms, with some systematic access gaps meaning that younger, better
educated workers in high-skilled occupations (such as managers, professionals and technicians) have
greater access to training opportunities than the less-educated ones (see OECD, 2008a, p. 5). Further,
Coetzer (2002, p. 5), Vaughan (2002, p. 5) and OECD (2008a, pp. 21-26) all draw attention to the
important role that informal training plays in SMEs. Coetzer cites the Australian study of Field (1998)
which reported a rich and complex picture of learning in SMEs despite limited use of structured training,
while Vaughan (2002, p. 5) suggests that "attention to informal training carried out in or by SMEs can
provide valuable insight into the priorities and training needs of SMEs".
Against this background of strong evidence, the LEED programme of the OECD initiated a project to
identify ways of overcoming barriers to workforce development in SMEs. New Zealand is a participant
in this project. The research for the project has involved gathering and analysing new data on SMEs
labour force participation in formal and informal training, analysing the impact of training and skills
development activities in firms, and examining local approaches to learn how incentives can be provided
to employers and employees for training activities that generate results for all employees (OECD, 2008,
p. 3). This report presents the results of this research, undertaken by the author in close collaboration
with the OECD research team, Dr Sylvain Giguère and Dr Cristina Martinez-Fernandez.
As well as focusing on formal and informal training in SMEs, the research has been informed by
another important theme in the international literature. Coetzer (2002, p. 2) cites several studies that
argue "we have entered a knowledge-based era where the emphasis is increasingly on human capital,
rather than financial and physical assets" so that "individuals at every level have to think for themselves,
exercise initiative, innovate, and solve problems at the source as quickly as possible". The OECD has
formalised this feature of modern enterprise in a concept termed Knowledge-Intensive Service Activities
abbreviated as KISA (see especially OECD, 2006; a New Zealand application to the software industry
has been reported by Williams, 2006). The concept has been well summarised by Martinez-Fernandez
(2006, p. 109):
Knowledge Intensive Service Activities (KISA) are defined as the activities
originated by the production and integration of knowledge-intensive services
crucial for the innovation process of the firm. They may be undertaken by firms in
manufacturing or service sectors, and in combination with manufactured outputs
or as stand-alone services (OECD, 2003, p. 2). Typical examples of KISA include
R&D services, management consulting, IT services, human resource management
services, legal services (such as those on IP-related issues), accounting,
financing, and marketing services. Activities oriented toward the use and
integration of knowledge are instrumental for building and maintaining a firm’s
innovation capability. In practice, KISA in a firm are achieved by the use of inhouse, or the combination of in-house and external, expertise. The capacity of the
firm to perform these KISA more effectively may indeed be what differentiates a
firm from its competitors.
Three aspects of the KISA concept are particularly relevant for the present study. First, it includes
what is often considered the core activity for an innovating firm (research and development, or R&D),
but it also recognises a much wider range of activities ranging from accounting to marketing. This is
consistent with previous research on the ICT sector in New Zealand which reported industry criticism
that government support for innovation tended to focus on R&D, whereas "the funds used for research
grants could be made more effective if they were leveraged with access to capital, if they encouraged
early adoption of good company governance structures, and if a portion of the grants could be accessed
for international marketing" (Saunders and Dalziel, 2006).
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
14 – INTRODUCTION
Second, the OECD research has identified that small firms can experience difficulty accessing
knowledge-intensive service activities. In a Norwegian aquaculture study, for example, researchers found
that "small low technology family firms were struggling to survive, and regarded KISA, if they thought
of them at all, as a luxury they could not afford" (OECD, 2006, p. 39). More generally, the research
found that (OECD, 2006, p. 40):
In many of the studies, however, small firms provided their own services because
they could not afford to purchase them on the market. They recognised the need
for, say, business planning or accounting, or personnel management services, and
so they developed sufficient expertise to perform the needed services themselves.
Sometimes they begrudged the time and effort away from what they saw as their
core business, and hoped that in the future they would be able to buy the service
in the market place.
Third, the link between KISA and innovation capability depends on the absorptive capacity of staff to
recognise and make use of new knowledge, which in turn raises fundamental issues about staff training
(OECD, 2006, pp. 44-45). This includes processes of learning by doing, participation in training from
external providers (including suppliers of inputs to the firm) and creating systems to record and share
new knowledge that is co-produced through customer relationships and industry networks.
The New Zealand study adopted the research method designed for the international project by the
OECD (2008b). This required two different areas of analysis, reported here in Part I and Part II
respectively. Part I focuses on individual enterprises. It presents results from a web-based survey of
SMEs in a region of New Zealand (Canterbury) that invited participants to provide information on
themes related to training and skills development in their enterprise.
Part II focuses on the regional "skills and training ecosystem" in Canterbury, exploring skills and
training related interactions between firms and other organisations in the region. The analysis for Part II
is based on a workshop held in Christchurch on 1 July 2009, attended by the OECD research team with
invited participants with expertise in skill development in SMEs. This is supported by five case studies of
small firms in Canterbury that examine in greater depth barriers and opportunities for formal and
informal training of employees.
The research reported in Parts I and II included new areas of enquiry in New Zealand, particularly in
those parts of the research that sought to better understand informal training issues faced by SMEs. It
should be noted that the study is of a relatively small number of participants (both in the survey and in
the case studies) drawn from just one region in the country. The report therefore seeks to distinguish
between research findings that are generally supported in the existing literature and other findings that
might be regarded as breaking new ground. The former are a solid basis for policy development, while
the latter findings provide suggestive hypotheses for further research and industry consultation in the
future.
Part III of the report draws on the research findings to distil major themes for future research and
policy development to support skills development and labour productivity growth in small and mediumsized enterprises. It finishes with a summary of specific conclusions arising from the New Zealand
country study. These will be considered alongside conclusions from the other country studies in this
OECD research programme before recommendations are formulated for future policy development.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
PART I/ SKILLS DEVELOPMENT IN SMES – 15
Part I
Skills Development in SMEs
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 17
Chapter 1 – The OECD Survey of Canterbury SMEs
The OECD research team prepared a web-based survey in collaboration with the New Zealand
team to collect new data on skills and training in small to medium-sized enterprises from a selected
region in each of the project’s participating countries. The project’s national stakeholders chose
Canterbury as the New Zealand region. Invitations to complete the survey were sent to SMEs listed in
the databases of the Canterbury Employers’ Chamber of Commerce, the Ashburton Business
Association, Enterprise Ashburton, the South Canterbury Chamber of Commerce (with the Aoraki
Development Trust), the Canterbury Development Corporation and the Apparel and Textile Industry
Training Organisation. 2
The survey was administered in two waves. In the first wave, the survey was open to respondents
from the first four organisations from 4 - 24 June. This produced 55 valid replies. In the second wave,
the survey was open to respondents from the last two organisations from 6 August to 31 August. This
produced a further 17 replies, so that the results presented in this first part of the report are from 72
SMEs. There was a good cross section of industry sector representation in the sample, as presented in
Figure 1.
Figure 1. Responding enterprises by industry sector
Primary Production
4
Manufacturing
12
Electricity, Gas, Water
2
Construction
9
Wholesale, Retail
9
Hotels, Restaurants
2
Transport, Storage, Com
3
Finance
4
Real Estate, Business
3
Public Admin, Defence
0
Education
7
Health, Social Work
9
Other Services
8
0
2
2
4
6
8
10
12
14
The research team is grateful to Peter Townsend and Tafflyn Bradford-James, Janine Sundberg, Rob
Brawley, Wendy Smith and Andrea Miller, Simon Worthington and Mike Gorinski respectively for allowing
and assisting the project to use these databases.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
18 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
The responding enterprises were well established; all but eight reported being in operation for five
years or more, with 48 of these having been in operation for at least ten years. The enterprises were
also asked about the primary place where they sell their products or services. Local markets were the
primary place for 38 of the respondents, with another 22 reporting national markets. Only
12 respondents indicated that their primary markets are international.
The project used the standard OECD definition of a SME as any enterprise with 250 or fewer
employees. It should be noted that the top half of that range would generally be considered a large
enterprise in New Zealand; the New Zealand Centre for SME Research adopts a cut-off figure of less
than 100 employees (Massey and Ingley, 2007, p. 4), for example, while for many purposes the
Ministry of Economic Development in New Zealand defines an SME as an enterprise with fewer than
20 employees (see MED, 2009, p. 7). Figure 2 presents data on the size of the enterprises who
responded to the OECD survey. Fifty-seven out of the 72 firms met the MED definition of 19 or fewer
employees, while all but one firm met the definition of the New Zealand Centre for SME Research.
Figure 2. Responding enterprises by number of employees
30
25
20
20
12
9
10
6
0
1-4
5-9
10-19
20-49
50-250
Nearly two-thirds of the work-force was identified as full-time (64%) and one-quarter as part-time
(26%). The remaining 10% were reported as casual workers.
The survey asked questions about the occupation and age structure of the firm’s workforce. The
answers are summarised in Figures 3 and 4. The survey defined high-skilled occupations as manager,
professional and technical; 40% of the employees were identified in this category. The skilled trades,
personal service and sales occupations were classified as medium-skilled occupations, accounting for
another 43%. 9% of the employees were recorded as "Don’t Know", so that only 8% were identified
as low skilled workers (plant workers and elementary workers). These last workers were employed in
just 18 of the 72 firms, so that three-quarters of the sample reported that they do not have staff in the
low skilled occupations of plant and elementary workers.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 19
Figure 3. Occupation distribution of employees
9%
12%
4%
Manager
4%
Professional
Technical
18%
Skilled Trades
Personal Service
18%
Sales
Plant Workers
Elementary
10%
Don't Know
7%
18%
There was a reasonably high level of "Don’t Know" replies to the question about the age
distribution of the firm’s workforce (15%). In contrast, the percentage of the workforce identified as
less than 24 years of age was just 11%, employed in 32% of the firms (44%).
Figure 4. Age distribution of employees
15%
11%
1%
<24 years
24-49 years
14%
50-64 years
>64 years
Don't know
59%
The survey asked how many of the firm’s employees are apprentices or trainees. Figure 5 records
that the majority of respondents (49, or 68.1%) reported they have no apprentices or trainees. There
were 17 replies reporting one or two apprentices or trainees, while only 6 replies indicated more than
two.
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20 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 5. Responding enterprises by number of apprentices or trainees
50
49
40
30
20
12
10
5
2
1
1
2
3
4
5
>5
0
0
1
2
The survey reported a high level of innovation among the enterprises. This result is likely to be
affected by "non-response bias" in the sample, since managers were more likely to have participated
in this voluntary survey if they have an interest in its focus on training and innovation. The survey
offered four areas of potential innovation, and asked participants if there had been any changes in the
previous twelve months introducing:
•
A new product/service (or a substantially changed product/service).
•
A new way of producing an existing product/service (e.g. a new operational process).
•
Changes to the way the firm does things such as a new or substantially changed accounting
system or human resource management system (e.g. a new management process).
•
A new technology or equipment. 3
Where there had been a change, the survey also asked for an indication of whether the innovation
had been incremental or radical. The results are presented in Figure 6. Of the respondents, 63.9%
reported that they had introduced a product innovation in the previous twelve months. This was the
highest area of innovation. More than half (52.8%) of the respondents reported an innovation in
management, while the remaining two categories were reported by just under one-half (48.6% in both
cases).
3
The second wave of the survey also asked for any changes in a fifth category: introducing a new product or
service or operation due to climate change adaptation/regulation.
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 21
Figure 6. Innovations in the previous year
(% of Respondents)
Total
70
Radical
Incremental
Not Stated
63.9
60
52.8
48.6
50
48.6
40
30
20
10
0
Product
Operation
Management
Technology
Following standard OECD definitions, the more highly innovative firms in the sample are those
that made at least one radical innovation or made serial innovations in three or four of the four
dimensions (product, process, management or technology) in the survey’s innovation question. Using
these definitions, the sample included 22 radical innovators and 32 serial innovators. There were
17 firms satisfying both criteria, so overall there were 37 highly innovative enterprises, one more than
half the sample. The highly innovative enterprises in the sample tended to be older and in a mid-range
size band:
1.1
•
76% of the highly innovative firms were 10 years or older, compared to 57% of the less
innovative firms.
•
35% of the highly innovative firms had 10-19 employees, compared to 20% of the less
innovative firms.
Skills training/learning reported by the firms
The survey asked about skills training and learning in the enterprise, making a distinction between
formal training/learning and informal alternative training/learning. The survey included the following
definitions of these two types of activity.
Formal Training refers to learning that occurs in an organised and structured
environment (e.g. in an education or training institution or on the job) and is explicitly
designated as learning (in terms of objectives, time or resources). Formal learning is
intentional from the learner’s point of view. It typically leads to validation and
certification.
Informal Alternative Training refers to learning resulting from daily activities related to
work, family or leisure. It is not organised or structured in terms of objectives, time or
learning support. Informal learning is in most cases unintentional from the learner’s
perspective.
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22 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Respondents were asked whether their business has formal training and career development plans
for employees (e.g. plans for career advancement and promotion), and does it have an annual budget
for training expenditure (e.g. formal/informal training; on/off the job; covering direct costs). 34 firms
reported that they have a formal plan (47%), and 45 firms that they have an annual training budget
(63%); see Figure 7. The last group were asked to indicate the size of the budget, with the results
shown in Figure 8.
Figure 7. Training and career development plans
50
45
40
34
30
20
10
0
Formal Plans
Annual Budget
Figure 8. Total annual budget for training (NZD)
Less than 2 000
9
2 000 to 2 999
5
3 000 to 4 999
5
5 000 to 9 999
4
10 000 to 19 999
6
20 000 to 49 999
5
50 000 or more
2
Did not answer
9
0
5
10
Figure 9 presents data on the total annual training budget (including those who reported they had
no budget, but excluding four firms that either did not answer or appeared to give an answer measured
in percentage rather than dollar units) analysed by the size of the enterprise. Firms with less than
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 23
20 employees (the MED definition of an SME in New Zealand) tended to have low budgets; 32 out of
55 firms in this category reported no annual budget, and only five firms reported an annual budget
greater than NZD 5 000.
Figure 9. Total annual training budget by size of enterprise (NZD)
100 000
Total Training Budget
80 000
60 000
40 000
20 000
0
0
20
40
60
80
100
120
140
Number of Employees
The survey took place at a time when the global economic recession was having a strong impact
on New Zealand businesses. The country’s official unemployment rate (seasonally adjusted) in
June 2009 was 5.7%, compared to 4.0% in June 2008 and 3.3% in June 2007. Against this
background, firms were asked whether the recession had changed any of the following eight items in
their business:
•
The number of staff employed at the establishment in total.
•
The number of young people aged under 24 recruited to their first job.
•
The number of apprentices and new trainees recruited by the establishment.
•
The proportion of employees provided with training.
•
Expenditure on training per employee.
•
The emphasis placed on informal learning instead of formal learning.
•
The proportion of your total training delivered by external providers.
•
The amount of formal training, leading to recognised qualifications that the business
supports.
The responses to these questions are summarised in Figures 10 and 11. The number of firms
reporting an increase in total employment exactly matched the number who reported a reduction, with
the largest number reporting no change. Most of the respondents could not say if there had been any
changes in the number of trainees or young people recruited to their first job, but 13 respondents
reported an increase in the number of apprentices and new trainees compared to only two who
reported a decrease.
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24 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 10.
Changes in employment in the last twelve months
Increased
Stay the Same
Decreased
DK/NA
42
40
37
30
26
23
23
22
20
13
10
7
15
6
2
0
0
Total
New Youth
Trainees
Note: DK/NA is “Don’t Know/Not Answered”.
Figure 11.
Changes in training in the last twelve months
Increased
Stay the Same
Decreased
DK/NA
43
38
40
39
37
34
30
22
20
18
19
17
13
9
10
11
13
12
11
8
8
5
2
1
0
Training
Budget
Informal
Quals
External
Note: DK/NA is “Don’t Know/Not Answered”.
The responses to the questions about training (Figure 11) were dominated by those reporting no
change in each of the five categories. In each case, more firms reported an increase in the last twelve
months than reported a decrease. This was particularly noticeable in the number who reported a
change in the emphasis placed on informal learning instead of formal learning (22 reporting a positive
change, with only one reporting a decrease).
This suggests that SMEs have been able, at least to some degree, to respond positively to the
challenges of the recession. During a time when publicly funded education supply remained capped,
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 25
there is evidence of SMEs shifting their training emphasis towards seeking out opportunities for nongovernment funded informal learning.
Respondents were asked where they thought additional training was needed in their business
(ongoing need or newly needed) over the next 12 months, covering seven or eight categories.
•
Generic – general IT user skills, oral communication, written communication, numeracy
and literacy, office admin skills.
•
Routine – repetitive, more basic, low knowledge intensive skills.
•
Technical/Advanced – skills required for problem solving; design, operation, rethinking
and maintenance of machinery or technological structures; IT professional skills.
•
Management – skills for business planning, regulations and quality control, human
resources planning (recruitment, training and skills development) and allocation of
resources.
•
Social – motivation and appreciation of people’s characteristics for individual and team
working purposes, customer handling; appreciation of networks and value-chain partners.
•
Language and cultural – ability to communicate in more than one language, appreciation
of cultural characteristics of different ethnic groups.
•
Entrepreneurial – specific skills for start-ups such as risk, strategic thinking, selfconfidence, the ability to make the best of personal networks and the ability of dealing with
challenges and requirements of different nature.
•
Green – specific skills required to adjust products, services or operations due to climate
change adjustments, requirements or regulations (note: this category was available only in
the second wave of the survey, and so is not reported here). It is reported in Section 1.5.
The results from this question are presented in Figures 12 and 13. For each category, firms were
asked whether there was "some need" or a "high need" for training. Figure 12 records that no more
than 14 firms (19%) reported a high need in any specific category, with entrepreneurial skills being
the most cited in this category.
Virtually all of the firms, however, recognised that there was at least some need for training in
their enterprise. Figure 13 depicts the number of areas identified by the firms as needing training in
the following 12 months. Only one firm in the sample did not recognise the need for any training,
while half of the sample (36 out of 72 firms) identified five or more areas where there is some need or
a high need for training. Figure 13 records that the most popular area was business skills (59 positive
responses) followed by social skills (52) and generic skills (50).
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26 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 12.
Additional training in the next twelve months
Some Need
High Need
50
50
45
41
38
40
30
26
24
18
20
14
9
10
5
11
9
4
3
0
Generic
Routine
Tech.
Figure 13.
Mgmt.
Social
Lang.
Entrep.
Number of identified training areas
25
23
20
15
13
9
10
8
8
5
5
5
1
0
0
1.2
1
2
3
4
5
6
7
Benefits and barriers to formal skills training
Section 2 of the survey asked about formal education and training in the firms under the general
heading of "industry training and vocational education and training (VET) activities". Respondents
were asked if any of their employees participated in formal training in any of the following areas
during the past 12 months:
•
Business planning (including management and leadership training)
•
Marketing and promotion
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 27
•
Research (including market research) and product development
•
Accounting and finance
•
Information and Technology
•
Human Resources
•
Legal courses (IP, patents etc.)
•
E-Commerce
•
Organisational Health and Safety
•
Job-specific technical training
•
Language courses
•
Social skills development
•
Entrepreneurship related training
•
Green skills development
(note: this category was available only in the second wave of the survey, and so is not
reported in the Figure 14)
•
Other
Respondents were also asked in each category to indicate whether their employees were involved
on a one-off basis to meet a specific need or were involved regularly in the particular training (defined
as weekly or monthly). The responses are summarised in Figure 14. Two areas stand out: job-specific
technical training (52 firms, or 72%) and business planning (48 firms or 67%). The job-specific
technical training was the item most likely to involve regular training, while most of the business
planning was one-off training.
Two other clusters of training areas are apparent in Figure 14. There was strong participation in
core business skills (marketing and promotion, information technology, and accounting and finance)
and in workforce skills (health and safety, and human resources), again with a bias towards one-off
rather than regular training.
These observations support one of the themes noted in the introduction to this report about the
importance of knowledge intensive service activities (KISA). In this survey, only 18 firms out of
72 participants (25%) reported that their staff had been involved in training for research (including
market research) and product development. This made it only eighth in the ranking implicit in
Figure 14, with other KISA categories being considerably more popular in the sample.
An interesting point concerns training in entrepreneurial skills. Recall from Figure 12 that this was
an area identified with a high need for training, but in Figure 14 it is one of the least popular items in
terms of participation in formal training activities. 4
4
A new report by the OECD (2010) focusing on SMEs, Entrepreneurship and Innovation, indicates the lack of
entrepreneurial programmes and formal training for SMEs.
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28 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 14.
Participation in formal training in the last twelve months
Regular Training
Business Planning
Marketing/Promotion
Research/Development
Accounting/Finance
Information/Technology
Human Resources
Legal Courses
E-Commerce
Health & Safety
Job-Specific Technical
Language Courses
Social Skills
Entrepreneurship
One-Off Training
48
36
18
30
36
26
14
12
30
52
4
15
12
0
10
20
30
40
50
Firms were asked to identify benefits to themselves, their industry and the Canterbury region from
the participation of their employees in training using the following pre-defined categories.
•
Increased productivity
•
Increased innovation (new/improved products or services or new/improved management
processes)
•
Market positioning (local, national, international)
•
Increased competitiveness
•
Upgraded skill levels
•
Increased levels of education attainment
•
Increased levels of trainers’ expertise in designated areas
•
Mitigation of climate change/contributing to the greening of the economy
(note: this category was available only in the second wave of the survey, and so is not
reported in the Figure 15)
•
Other
The results are shown in Figures 15 and 16, drawn to the same scale on the horizontal axis.
Respondents were far more confident in identifying benefits to the firm (Figure 15) than they were at
identifying benefits to the industry and region (Figure 16). In particular, more than two-thirds of the
sample (52 and 50 respondents respectively) recognised that the formal training contributed to high
skill levels and higher productivity in the firm. More than half of the sample also recognised
contributions to market position, competitiveness and innovation at the enterprise level.
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 29
Figure 15.
Benefits to the firm of formal training
Skill Levels
52
Productivity
50
Market Position
43
Competitiveness
42
Innovation
41
Trainer Expertise
25
Education Level
20
0
10
20
30
40
50
In contrast, Figure 16 records that in each of the categories, no more than 10 respondents
recognised a benefit of their employee training to the industry, and no more than 9 recognised a
benefit to the region. This result may suggest that the training decisions of firms are motivated by
firm-specific skill needs (as might be expected from the VET literature on this point), with little
attention to the value of those skills to the industry or region more generally.
Figure 16.
Benefits to the industry and region of formal training
10
Competitiveness
7
9
Skill Levels
4
8
Innovation
5
7
7
Market Position
7
Trainer Expertise
3
6
5
Productivity
To Industry
5
4
Education Level
0
To Region
10
20
30
40
50
Firms were asked whether there any training activities that they would have liked to have carried
out but did not in the previous twelve months. Half of the respondents answered that there was
(Figure 17).
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30 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 17.
Was there desired training not carried out?
(% of Respondents)
6%
Yes
50%
No
DK/NA
44%
Note: DK/NA is “Don’t Know/Not Answered”.
The survey explored the barriers leading to desired training not being carried out. Again
respondents were provided with a list of predetermined options, which they were asked to consider for
medium to high skilled employee training and for low skilled employee training:
•
High costs/too expensive
•
People recruited with skills needed (initial training sufficient)
•
Lack of public financing
•
Impossible to interrupt production/no time
•
Difficult to assess enterprise needs
•
Staff not willing to participate in training
•
Training is too difficult to implement
•
Risk of poaching after training
•
Too difficult to identify suitable training providers
•
Too difficult to access training (location; availability at a suitable time)
•
Other barriers
The responses are summarised in Figures 18 and 19. The lower response rate for low skilled
employee training is not surprising; recall that only 25% of the sample reported that they employ
workers in the occupation categories identified as low skilled (see the discussion earlier in the chapter
about the data in Figure 3).
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 31
Figure 18.
Barriers for medium to high skilled employee training
Costs
25
No Time
18
Training not Accessible
15
Public Finance
12
Needs not Known
11
Providers not Known
9
Skills can be Recruited
8
Too Difficult
5
Risk of Poaching
4
Unwilling Staff
2
0
Figure 19.
5
10
15
20
25
20
25
Barriers for low skilled employee training
Skills can be Recruited
9
Costs
8
Training not Accessible
7
No Time
6
Unwilling Staff
6
Too Difficult
5
Needs not Known
4
Risk of Poaching
4
Public Finance
3
Providers not Known
3
0
5
10
15
There are some interesting similarities and differences in the two lists. With one exception, the top
three barriers for both sets of employees are costs, no time and training not accessible. The exception
is that firms reported that skills can be recruited for low skilled occupations, whereas this response is
well down the list for the medium to high skilled occupations. This may reflect that the industry
training system is largely geared towards lower skill levels. Another point of difference is that
unwilling staff was given as the fifth reason for low skilled employees, but was the last reason for
medium to high skilled employees. Another similarity is that risk of poaching is not important in
either list, supporting the suggestion made earlier that perhaps firms tend to focus on training their
employees in firm-specific skills.
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32 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
1.3
Benefits and barriers to informal alternative skills training
Section 3 of the survey explored informal alternative training activities that may increase the
skills, knowledge or competencies of employees in significant ways. Employees may learn, for
example, through interactions with co-workers, suppliers, clients or consultants. Alternatively,
projects internal to a firm to improve work processes (such as quality control and product
development) might result in staff learning and development. In these situations, the skills,
competencies or knowledge gained are not part of recognised or formal education and training
programmes. Consequently, Section 3 began by asking whether in addition to any training activities
that had been mentioned previously, the business carried out, in the previous twelve months, any of
the following activities which significantly increased the skills, competencies or knowledge of the
firm’s employees:
•
Business planning (including management and leadership services, consultancy and advice)
•
Marketing and promotion services
•
Research (including market research) and product development
•
Accounting and finance services
•
Information and Technology services
•
Human Resource services
•
Legal advice and services (IP, patents etc.)
•
E-Commerce (e.g. on-line work with clients and suppliers; access to web-based information)
•
Organisational Health and Safety advice
•
Job-specific technical activities (e.g. advice on utilisation of new plant or equipment)
•
Language or communication coaching
•
Social skills development
•
Entrepreneurship related activities (e.g. brainstorming about opening new markets or new
range of products and services)
•
Green skills development (e.g. co-operation with other organisations to find ways to adjust
production to minimise climate change)
(note: this category was available only in the second wave of the survey, and so is not
reported in the Figure 20)
•
Other
This list is similar to the formal training list at the beginning of Section 2 of the survey, and has a
similar focus on knowledge intensive service activities. There are some strong similarities with the
reported participation of staff in informal training (shown in Figure 20) compared to their
participation in their formal training (Figure 14 in Section 1.2), with one exception. The exception is
participation in entrepreneurship related activities, which is fourth on the list for informal training,
reported by 39 firms (of whom 21 reported this was a regular event). Otherwise the top activities were
comprised of the same five items: business planning, job-specific technical skills, marketing and
promotion, information and technology, and health and safety.
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 33
Figure 20.
Participation in informal training in the last twelve months
Regular Training
One-Off Training
Business Planning
Marketing/Promotion
Research/Development
Accounting/Finance
Information/Technology
Human Resources
Legal Advice
E-Commerce
Health & Safety
Job-Specific Technical
Language Coaching
Social Skills Devel.
Entrepreneurship
50
44
30
28
35
29
20
31
33
44
16
16
39
0
10
20
30
40
50
A feature of informal training through knowledge intensive service activities is that the learning
takes place through interaction with others in the course of doing business. Consequently the survey
sought to identify the most important sources of learning from the sample, and asked respondents to
indicate the importance of the following groups in the alternative training activities their business did
during the previous 12 months:
•
Co-workers
•
Suppliers
•
Clients
•
Business consultants
•
Competitors
•
Firms from the same industry clusters
•
Firms from value-chain
•
Industry associations
•
Government departments
•
Informal networks
•
Other
Figure 21 shows the number of respondents who stated that each category was highly important in
the previous twelve months. Clients and co-workers clearly stand out as the most important sources of
informal training, with another important group comprised of informal networks, suppliers and
industry associations. The very low value for academics (7 out of 72 firms, and bottom of the list) is
consistent with policy concern in New Zealand that there needs to be stronger incentives for
university and polytechnic staff to be more engaged with their local business communities.
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34 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 21.
Highly important sources of informal training in the last twelve months
Clients
58
Co-workers
52
Informal Networks
37
Suppliers
33
Industry Assns
30
Govt Depts
20
Consultants
18
Industry Cluster
16
Competitors
13
Value Chain
11
Academics
7
0
10
20
30
40
50
60
Firms were asked what percentage of their employees participated in these type of activities
during the past 12 months. The results are presented in the pie chart of Figure 22. The most common
response was that all staff were involved (39% of the sample), with a further 13% reporting that
between 80% and 99% of their staff participated in informal training activities. Only 7% reported that
less than one-fifth of their staff were involved in informal training.
The respondents were also asked to indicate what proportion of the participating employees were
low skilled, and what proportion were young. The former question needs to be interpreted carefully,
since only 25% of the sample reported employing workers in unskilled occupations, and these
workers made up only 8% of the workforce in the sample. Thus it is not surprising that the firms
reported very low proportions of participation by low skilled workers.
More interesting is the results for young workers aged under 24, reported in Figure 23. Fifty-eight
per cent of the sample did not have any employees in this age group, or did not know if they were
involved in training or not. Of the remaining 42%, the firms were reasonably evenly split between
those who provided training (22%) and those who did not (20%).
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 35
Figure 22.
Percentage of staff involved in informal training
(% of Respondents)
7%
16%
39%
1‐19%
20‐39%
40‐59%
60‐79%
80‐99%
100%
20%
13%
Figure 23.
5%
Percentage of participants in informal training
(% of Respondents)
4%
22%
Don't Know
No Youth Employed
No Youth Training
20%
54%
Youth Training
The respondents were asked to indicate the benefits to employees from their participation, both in
terms of the skills gained (using the same list of categories reported in section 1.1) and in term of
employment progression or career advancement, higher wages, or higher job mobility within the firm
or industry sector. The results are presented in Figures 24 and 25, analysed by the responses for
medium to high skilled staff and low skilled staff.
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36 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 24.
Improved skills from informal training (%)
70.8%
Management Skills
11.1%
58.3%
Technical Skills
27.8%
58.3%
Social Skills
44.4%
33.3%
38.9%
Routine Skills
22.2%
16.7%
Generic Skills
High Skilled Staff
13.9%
16.7%
Language/Cultural
0%
20%
Low Skilled Staff
40%
60%
80%
The data in Figures 24 and 25 are expressed as percentages. The data for medium to high skilled
staff are expressed as a percentage of all respondents (72 firms). The data for low skilled staff are a
percentage of the respondents who reported employing staff in the low skilled occupations (18 firms).
The item that stands out in Figure 24 is the learning of management skills by medium to high skilled
staff, reported by 51 of the 72 firms (71%). Technical skills and social skills were also key
improvements from participation in informal training by this skilled group (reported by 42 firms each,
or 58%). In contrast, social skills and routine skills were the two most common categories for low
skilled staff.
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 37
Figure 25.
Other employee benefits from informal training (%)
50.0%
Career Advancement
16.7%
31.9%
22.2%
Higher Wages
19.4%
11.1%
Job Mobility
High Skilled Staff
6.9%
5.6%
Other
0%
20%
Low Skilled Staff
40%
60%
80%
From Figure 25, employees who participated in informal training were thought by their managers
to have benefited through career advancement and higher wages, with a smaller number increasing
job mobility. The other benefits listed by respondents were: achievement of personal goals and
personal satisfaction of the role they are in; improved client service levels, promotion, improved
efficiency, and two unspecified other benefits. The benefits were weighted towards medium to high
skilled staff, particularly career advancement.
Firms were asked to identify benefits to themselves, their industry and the Canterbury region from
the participation of their employees in informal training using the same pre-defined categories as
listed in section 1.2 for the formal training.
The results are shown in Figures 26 and 27, drawn to the same scale on the horizontal axis. Again
the respondents were far more confident in identifying benefits to the firm (Figure 26) than they were
at identifying benefits to the industry and region (Figure 27). The most commonly reported firm-level
benefits were productivity and skill levels (49 firms, or 68%), closely followed by market position and
competitiveness (46 firms, 64%). Perhaps surprisingly, innovation was cited by just 37 of the firms
(51%) and came in fifth on the list.
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38 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 26.
Benefits to the firm of informal training
Productivity
49
Skill Levels
49
Market Position
46
Competitiveness
46
Innovation
37
Education Level
25
Trainer Expertise
23
0
10
20
30
40
50
In contrast, Figure 27 records that in each of the categories, no more than 12 respondents
recognised a benefit of their employee training to the industry, and no more than 6 recognised a
benefit to the region. Again this result may suggest that the enterprises are focusing on training their
employees in skills that are specifically needed within the firm. The highest ranked benefit to the
industry was innovation (in contrast to its position as fifth in the firm-level ranking). This perhaps
provides some evidence that the participants recognised that a higher skilled workforce is helpful for
enhancing the sector’s innovation.
Figure 27.
Benefits to the industry and region of informal training
12
Innovation
5
9
Skill Levels
6
8
Productivity
6
7
Market Position
5
6
Education Level
3
5
6
Competitiveness
To Industry
To Region
4
Trainer Expertise
2
0
10
20
30
40
50
Finally, Section 3 of the survey asked participants if they considered any of the informal training
activities in the list in section 1.3 to be better sources of learning for staff than formal education and
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 39
training courses. They were asked to differentiate between high-medium and low skilled employees,
with the different responses presented in Figures 28 and 29. Although the second part of the question
was answered by more firms than just those who reported employees in the two low-skilled
categories, comparisons between the two sets of data in the two figures need to be treated cautiously
because so few firms in the sample employ staff in the low skill categories.
Figure 28.
Better sources than formal education (medium to high skilled employees)
Business Planning
33
Marketing/Promotion
27
Information/Technology
27
Entrepreneurship
27
Research/Development
24
E-Commerce
24
Accounting/Finance
23
Job-Specific Technical
20
Human Resources
19
Health & Safety
18
Legal Advice
17
Social Skills
12
Language Coaching
10
0
10
20
30
None of the categories in either figure were supported by half or more of the respondents.
Nevertheless, in Figure 28 there is a strong emphasis on business oriented sources form the medium to
high skilled staff: business planning is top of the ranking (33 firms) followed closely by marketing
and promotion, information and technology, and entrepreneurship (all nominated by 27 firms) and
another cluster around research and development, e-commerce, and accounting and finance (24 or 23
firms). In contrast, Figure 29 reveals that for the low skilled staff the emphasis is on social skills (17
firms), health and safety (14 firms), job-specific technical activities (14 firms) and language coaching
(11 firms).
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40 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 29.
Better sources than formal education (low skilled employees)
Social Skills
17
Health & Safety
14
Job-Specific Technical
14
Language Coaching
11
E-Commerce
9
Information/Technology
8
Human Resources
6
Marketing/Promotion
5
Research/Development
5
Entrepreneurship
4
Business Planning
2
Accounting/Finance
2
Legal Advice
1
0
1.4
10
20
30
Motivation and collaboration for skills training
The final section of the survey involved two questions asking respondents about their reasons for
training and skills development activities in their business (formal and informal) and about the
organisations with whom their business associates for this purpose. For the first question, respondents
were offered a comprehensive list of possible motivating factors listed in Table 2. They were asked to
indicate the relevant motivating factors for formal activities (Industry training and VET courses) and
informal activities (other activities that develop skills and competencies). Figures 30 and 31 present
the top eleven factors for the two classes of training activity.
The first point to note from the two figures is that there were many more responses for informal
training, and that the top four items for informal training (each of which was indicated by more than
half the sample) were motivated by in-house incentives: service requirements; need to increase
employee skill levels; new product or service development; and production needs. Further, there is no
mention of policy incentives or government programmes in the top eleven motivations for informal
training. In short, the motivation for informal training comes primarily from the business needs of the
enterprise, followed by local industry and business networks.
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 41
Table 2. Motivations for participation in formal and informal training
Public incentives/government programmes
•
International (e.g. EU policies, Trans-Tasman policies/programmes)
•
National (country specific government programmes)
•
Regional (metropolitan / regional programmes)
•
Local (council / local government programmes)
•
Country regulations (e.g. training levies, training requirements)
Private incentives (including facilitation/promotion/information of training)
•
Collective agreements (trade unions)
•
Industry sector association services/activities
•
Chambers of Commerce services/activities
•
Industry clusters services/activities
•
Value-chain firms’ activities
•
Business networks activities
•
Local networks activities
•
Foundations activities
In-house incentives
•
Production needs
•
Service requirements
•
New product / service development
•
Adjustments to financial constraints
•
Adjustments to climate change impacts
•
Job/position adjustments
•
Need to increase employee skills level
Other
•
Requested to specify
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42 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
Figure 30.
Motivations for participation in formal training
Industry Assn
23
Employee Skills
23
Training Regs
17
Production Needs
17
Service Needs
17
Chamber of Com.
15
Local Govt
13
Industry Cluster
13
New Product
13
National Govt
11
Local Network
11
0
Figure 31.
10
20
30
40
Motivations for participation in informal training
Service Needs
42
Employee Skills
41
New Product
39
Production Needs
37
Local Network
35
Job Changes
34
Chamber of Com.
32
Business Network
31
Financial
25
Industry Cluster
23
Industry Assn
18
0
10
20
30
40
The second point to note from Figures 30 and 31 is that industry sector association services and
activities is item eleven in the informal training list, but is first equal in the formal training list. This is
likely to reflect the crucial role that Industry Training Organisations play in organising formal training
and assessment for employees in the New Zealand system of vocational education and training.
Further, the list for formal training includes country regulations (e.g. training levies, training
requirements), local government programmes and country specific government programmes in its top
ten items, whereas none of these three items appear in Figure 31.
The final question asked the respondent to cite the organisations with whom the business
associates for training and skills development activities from a predetermined list of options. The list
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CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES – 43
and the number of positive responses, analysed by formal and informal training, are presented in
Table 3. The Industry Training Organisations (ITOs), the Institutes of Technology and Polytechnics
(ITPs) and Universities tended to be associates in formal training activities, while business
organisations, Chambers of Commerce and private consultants tended to be associates in informal
activities. Note that the high response for Chambers of Commerce needs to be interpreted with some
care, since most of the respondents to the survey were drawn from Chamber of Commerce databases.
Table 3. Number of reported types of training collaboration
Type of Organisation
Industry Training Organisations (ITOs)
Institutes of Technology / Polytechnics (ITPs)
Universities / Wānanga
Trade Unions
Business Organisations
Chambers of Commerce
Firms from Value-Chain (suppliers, clients)
Government Departments
Private Consultants and Paid Advisors
Private Training Providers
Local Councils / Municipalities
Local Community Organisation
Other Parts of the Same Enterprise Group
Other Education Providers
1.5
Formal:
Industry Training and VET Activities
28
18
15
2
12
21
5
14
11
14
3
6
6
2
Informal:
Other Interactive Activities
10
10
8
1
18
30
7
10
21
14
5
3
8
2
Skills training and "green skills"
There is considerable interest among policy advisors to understand the impacts that climate
changes, and especially subsequent mitigation and adaptation policies, are having on labour market
developments. As noted, for example, in a recent working paper prepared as part of a project on
Climate Change, Employment and Local Development undertaken under the auspices of the OECD
LEED Directing Committee, within the framework of the OECD’s Green Growth Strategy "adapting
labour markets to achieve more jobs and better quality jobs to move towards a low-carbon economy
requires strengthening education and training systems as well as supporting skills development
activities both at the industry and public sector levels for which we have little knowledge and
understanding of the dominant dynamics" (OECD, 2010, p. 5).
Consequently, the OECD added a number of questions relevant to the issue of skills training and
"green employment" to the survey reported in this chapter. These additional questions were answered
by the second wave of 16 respondents. This low number means that the results cannot stand on their
own as reliable evidence, but they do support similar results that have been obtained from the surveys
carried out in the other countries participating in this research programme. They are also consistent
with feedback in the five case studies reported in Chapter 3 and are suggestive of the need for further
research in this area. A summary of the core results are presented in Table 4.
Four of the sixteen firms (25%) reported that they had made changes in the previous twelve
months in terms of introducing a new product or service or operation due to climate change adaptation
or regulation. This percentage was low compared to other forms of innovation: 62% reported a
product innovation; 56% an operation innovation; 44% a management innovation; and 31% a
technology innovation.
The awareness of firms regarding green skills and training needs for the future appears to be
limited. The in-depth interviews confirmed that although some need of skills upgrading is foreseen
there is relatively little knowledge of the areas or the way the training should be implemented. Indeed,
the preliminary results in Table 4 suggest that existing "green" vocational education and training
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44 – CHAPTER 1: THE OECD SURVEY OF CANTERBURY SMES
participation may be very limited (12% of firms). Knowledge intensive green activities appear to be
more frequent (50% of firms in Table 4), highlighting the role of informal learning for SMEs to green
their activities and skills. In both learning and training approaches, green skills acquisition is higher
for high-medium skilled employees than for low-skilled employees.
Table 4. Responses from 16 firms about "green skills"
Has your business made changes in the past 12 months in terms of introducing a new product/service/operation due to climate change
adaptation/regulation?
Yes
4
No
11
Not Answered
1
Do you think additional training is needed in your business (ongoing need or newly needed) over the next 12 months in the following area:
Green – specific skills required to adjust your products, services or operations due to climate change adjustments, requirements or
regulations?
High Need
1
Some Need
9
No Need
5
Not Answered
1
Did any of your employees participate in industry training or vocational education and training (VET) activities in any of the following areas
during the past 12 months: Green skills development?
Regularly
1
One-Off
1
Did Not Do
13
Not Answered
1
In your opinion, did your employees get any of the following outcomes from the above training: improved green skills (e.g. adjusting to climate
change)?
For High-Medium Skilled Staff
4
For Low Skilled Staff
1
Neither Group
12
Not Answered
0
In addition to any training activities that were mentioned previously, did your business carry out, in the past 12 months, any of the following
activities which significantly increased the skills, competencies or knowledge of your employees: Green skills development (e.g. co-operation
with other organisations to find ways to adjust production to minimise climate change)?
Regularly
3
One-Off
5
Did Not Do
7
Not Answered
1
In your opinion, did your employees get any of the following outcomes from participating in these activities (in the short or long term): improved
green skills (e.g. adjusting to climate change)?
For High-Medium Skilled Staff
3
For Low Skilled Staff
2
Neither Group
9
Not Answered
3
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PART II: THE REGIONAL SKILLS AND TRAINING ECOSYSTEM IN CANTERBURY – 45
Part II
The Regional Skills and Training Ecosystem in Canterbury
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CHAPTER 2: THE OECD WORKSHOP IN CHRISTCHURCH – 47
Chapter 2 – The OECD Workshop in Christchurch
The OECD survey presented in Part I of this report provides new data on how firms manage
formal and informal alternative learning to improve relevant skills of their staff. A second aim of the
OECD research project was to explore features of the regional training ecosystem supporting these
individual firms. The concept of "regional training ecosystems" originated in David Finegold’s (1999)
case study of high tech firms clustered in Northern and Southern California. Finegold’s study focused
on "high skills ecosystems" but other authors have since argued it can be extended to other sectors of
the economy; see especially Buchanan et al, (2001) and Windsor and Alcorso (2008). In this approach
a skill ecosystem is defined as "a self-sustaining network of workforce skills and knowledge in an
industry or region" (Windsor and Alcorso, 2008, p. 5). The network is comprised of a range of actors,
as shown in Figure 32. This figure is for a high skill ecosystem, but the authors also note that a low
skill ecosystem characterised by "low productivity, low wages and a low value-add business strategy"
can also discourage individuals from pursuing work-related learning (idem).
Figure 32.
A high skill ecosystem
See comparative advantage through addressing skill development and business performance in tandem to generate innovation and growth High skill ecosystem flourishes Firms
Responsive delivery at all levels that individuals & employers value Education
and training
Policy settings
Individuals
Invest in skills because rewarding jobs/career opportunities are available
Source: Windsor and Alcorso (2008, p. 5)
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VET, employment and industry policies support high skills strategy 48 – CHAPTER 2: THE OECD WORKSHOP IN CHRISTCHURCH
To explore this concept in a New Zealand setting, the OECD arranged for a Skills and Training
Ecosystem Workshop to be held in Christchurch (the largest city in the Canterbury region) on 1 July
2009. The workshop was hosted by the Canterbury Employers’ Chamber of Commerce, the AERU
Research Unit at Lincoln University, the Christchurch Polytechnic Institute of Technology and the
Canterbury Development Corporation, in conjunction with the New Zealand Department of Labour. 5
The workshop focused on four themes. Each theme began with a presentation based on early
results from the first wave of the survey analysed in Part I of this report, followed by small discussion
groups focusing on questions provided by the research team. Each group reported back to a plenary
session of the workshop and there was time for further discussion in the full group. The workshop
ended with a roundtable of summaries and key messages.
2.1
Skill needs
The first thematic discussion focused on the survey finding that additional skills training was
needed over the next twelve months, especially in the areas of management skills, social skills,
generic skills and technical skills (see Figure 12 earlier in this report). Participants in the workshops
were asked to discuss: whether employees in SMEs and local talent are able to provide these skills;
how could these skills be developed and be ready for local firms to utilize them; what could be done
by public agencies intermediaries and by business organisations and training organisations so that the
level of skills needs is reached; and whether there were any clear skills shortages being experienced
by firms in the region.
The discussion analysed these questions at two levels: the level of the individual enterprise and
the level of regional or national institutions (including the educators).
At the individual firm level, there was a view that it is a specific skill to be able to determine the
in-house needs for skill capabilities, to identify skills gaps in the current employees, to be
knowledgeable about training opportunities (including public subsidies), and to design an skills
development plan that fits within the firm’s budget and time constraints. It was suggested that this
may not be appreciated by SME managers who may have little time for training themselves. Some
SMEs adopt a strategy based on a low cost workforce, and are not interested in raising the skills of
their staff. In other cases, training resources may be entirely absorbed by compliance to meet health
and safety regulations. Employees can have mixed attitudes towards ongoing training, especially if
there is no clear financial reward for learning achievements. It was also suggested that some
employees have unrealistic expectations about rapid advancement while they are still inexperienced.
In contrast, some SMEs deliberately maintain a strong culture of embedded learning, with an
emphasis on using local internal resources for raising skill levels (through mentoring schemes, for
example).
At the regional level, there was considerable discussion about low literacy, numeracy and basic
computing skills in some segments of the labour force. This was being addressed through the New
Zealand Skills Strategy (see New Zealand Government, 2008), and this focus was strongly supported.
The recession had reduced skills shortages in the region, which had been more pronounced one to two
years earlier. Nevertheless participants reported that there were still skill shortages in areas such as the
construction sector, health professionals, pre-school education and aged care, and also suggested that
the recession provided an opportunity to invest in skills development (for example through greater
government support for apprenticeships). There were also suggestions that there is a need for more
5
The research team is grateful to Peter Townsend (CECC), Gay Sharlotte (CPIT), Simon Worthington (CDC)
and Paul Barker (Department of Labour). We are also grateful to Dr Teresa Cunningham and Meike
Guenther (AERU) for helping to organise the workshop, and to Tamara Weyman (University of Western
Sydney) who took extensive notes at the workshop which she made available for the writing of this report.
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CHAPTER 2: THE OECD WORKSHOP IN CHRISTCHURCH – 49
training aimed at middle managers and that not-for-profit organisations need to have good training
programmes for their volunteer members.
It was considered that there is good mix of public and private providers of training in Canterbury,
sufficient to meet local demand. The Industry Training Organisations (ITOs), for example, are well
placed to arrange for relevant training for employees. Nevertheless, the wide range of providers can
make it difficult for a small business to find the right organisation for its training needs. In many
cases, training programmes by the larger organisations are not appropriate, or are pitched at the wrong
level (too low or too high), or are not suited for workers who learn best through practical application
rather than reading or writing. There may be a promotional role for government agencies or employer
groups or the ITOs to communicate about what training options are available, especially from private
training enterprises (PTEs). Smaller firms might want to form a long-term training partnership with a
PTE as a way to maximise the value of their training dollar.
Some sectors have achieved a better level of interaction between educators and business than
others. It was reported that engineering faculties, for example, are more connected with local business
than commerce faculties. It was also reported that careers in the trades are not well promoted in
secondary schools, especially compared to academic pathways. It was suggested that there is potential
for greater involvement of industry with career education in schools.
There was a lot of discussion about the tension between generic trainer-determined programmes
and flexible business-determined programmes supplied by private training enterprises (PTEs). This
discussion suggested that funding tends to favour the former (perhaps because generic courses are
cheaper to operate) rather than the latter. Consequently, ITOs and polytechnics may not be well
geared up to meet training that will address the specific needs of an individual SME. While generic
funding policies are not aimed to meet the firm-specific needs of firms, they do provide for some
SMEs, along with other stakeholders, to have a strong role in influencing the nature of training
provision in their region. This suggests an important role for the Tertiary Education Commission
(TEC) in providing information to SMEs about how best they can liaise with tertiary providers to
encourage supply of education that does meet their demands.
2.2
Training and competence building in SMEs
The second thematic discussion focused on the survey finding that half of the respondents in the
Canterbury survey reported that the level of training and competence building activities in their firm
was less than they would have liked to have carried out in the previous twelve months (see Figure 16
earlier in this report). The survey also revealed that cost and time are major barriers (Figure 17).
Participants in the workshops were asked to discuss: whether those results were under or over
estimated; is training reaching the low skilled, younger or older workers, and disadvantaged groups;
and are there specific issues for SMEs that larger firms don’t have to face.
The general consensus among the workshop participants was that the reported result of 50% of
firms do not do all they training they would like is reasonable, although it was noted that this may
affected by "non-response bias" because managers with a greater interest in training are more likely to
respond to a survey of this type.
There was also a general consensus that training is universally available in New Zealand, and
some training is succeeding in reaching certain target groups. This includes literacy and numeracy
modules embedded in ITO programmes, although penetration rates are less than desirable in some
areas. Formal training tends to be dominated by people under 25; older men without qualifications
may find it harder to access training. There is a concern that informal training may be facing some
gaps as the older generation of trades people retire without people of similar experience behind them
to take their place (because of the lost cohort of training during and immediately after New Zealand’s
economic reforms of 1984 to 1994).
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Three issues were identified for young people. First, concern was expressed that young people are
not getting the full picture about trades training paths from careers guidance at school; indeed it was
suggested that schools have tended to undervalue trade vocations and training in favour of a focus on
university education. Second, policy needs to cater for young people who dropped out of learning at
school but are looking to reengage with training options. The spike in youth unemployment during the
current recession makes this particularly important. Third, within a firm a young person may benefit
greatly from training but not be in a position where they can push themselves forward to be
considered for training. A lot may depend on the employers’ expectations.
A number of issues were identified for SMEs, both positive and negative. Larger firms have the
resources to employ a dedicated human resource manager who can oversee a formal training plan and
link it to business needs. Without this specialist expertise, it may be difficult for an SME manager to
evaluate the benefits of training for the firm or to foresee how new skills developed through training
could be used to raise labour productivity. Costs and time away from productive work are often seen
as large barriers in an SME. It is not really economic to arrange for one-on-one training, but how can
an SME arrange for six of its staff to participate together in a training session? The disruption to the
shop floor may be unmanageable. It may be harder for an SME to have a workplace training assessor
to obtain formal qualifications for staff learning skills in-house.
On the positive side, small firms with a positive training culture can build up strong employee
loyalty with lower turnover costs. A positive training culture may include deliberately maintained
mentoring relationships, perhaps involving the founder-manager in a small firm. The reputation effect
of being a good employer can attract better quality staff, especially in small communities. A small
business may have periods of less intensive work, including during the current recession, when
training may be easier to arrange, although this may not be possible if the quiet times are associated
with cash flow difficulties.
It was suggested that size need not be decisive in skills development within an enterprise. Some
business founders have a strongly positive attitude towards workplace learning while others are
equally strongly negative. The industry environment can play a role: in some cases health and safety
regulations demand ongoing training, perhaps with formal certification. SMEs may have a business
plan based on increasing labour productivity through skilled staff while others may base their
competitiveness on maintaining a low-paid workforce. A firm’s commitment to training is likely to
change as it grows and develops. A particular issue is whether the manager of an SME is able to find
time for his or her own skills development.
2.3
Role of training networks
The third thematic discussion began with an overview by Gay Sharlotte (CPIT) on how the New
Zealand government’s regional facilitation programme had operated in Christchurch over the previous
three years. This was a programme implemented by the Tertiary Education Commission to encourage
regional training networks facilitated by the local institute of technology or polytechnic (ITP). The
Christchurch Polytechnic Institute of Technology (CPIT) had convened a steering group that had
organised education and training provider forums to identify regional training needs, gaps and
priorities. This had produced, among other things, the Regional Statement of Tertiary Education
Needs, Gaps and Priorities in Canterbury, 2008-2010 (CPIT, 2008) and had fed into the development
of a Canterbury regional labour market strategy (CLMS Governance Group, 2008). The regional
facilitation programme was being phased out after a change in government policy, but it had shown
that a "network of networks" could produce positive outcomes for learners, trainers and employers.
The OECD survey found that regional training networks were generally well known to the
responding firms (see Section 1.4). Participants in the workshops were asked to discuss the role of
public agencies, business organisations, trade unions, and tertiary education organisations on the
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CHAPTER 2: THE OECD WORKSHOP IN CHRISTCHURCH – 51
functioning of the skills and training system in Canterbury. They were also asked to suggest strategies
for increasing linkages between firms and training organisations in Canterbury, and for improving the
region’s training levels.
There are formal training networks among educators in Canterbury, including the Canterbury
Tertiary Alliance and the Canterbury Training Providers Association. These tend to be student
focused rather than addressing the needs of industry. There are also some informal networks as a
result of previous programmes such as Regional Facilitation, which was designed to focus on the
relevance of provision of training to industry. At a national level, Industry Training Organisations
have a legal responsibility to work with their industries to create strategic plans that then inform
provision of training.
There are examples of good industry level partnerships between businesses and trainers. The
Trades Innovation Institute at the CPIT is an outstanding example of collaboration. This has taken
time to build up cohesion, but is now bearing fruit. The health sector is another area where
collaboration between employers and trainers is good. A further example is the SiteSafe programme,
initiated by four large companies to set up a non-for-profit organisation to address a serious common
goal (supported by the Department of Labour and the Accident Compensation Corporation).
Nevertheless, there was a general view that the partnerships are fragmented, with the networks
being independent of each other and largely dictated by funding sources. It was also noted that the
information and communications technology sector does not have an ITO, although there have been
partnerships created between large employers and tertiary educators (the universities and the
polytechnics). The workshop participants thought it would be very difficult to answer these questions
in the context of informal training activities.
The workshop found it difficult to suggest concrete strategies for increasing linkages between
firms and training organisations. There was a strong consensus about the need for greater coordination and communication along the lines proposed in the regional facilitation programme, but it
was not easy to determine how this could be achieved. The CPIT, for example, had recognised there
were missing voices in the regional facilitation forums (for example; small businesses, recent
migrants, unemployed workers, Asian communities and youth) and had not succeeded in finding ways
to involve representatives. More generally, it was thought difficult for business owners to have
opportunities for input into government agencies to keep training up-to-date. Four suggestions were
made:
•
Better advice and training pathways for international students
•
Greater co-ordination between the ITOs at a regional level
•
Secondment projects between firms and academics
•
Better alignment of funding streams
There was a strong debate in the workshop about what was perceived as a very large number of
qualifications (nearly 6 000, including 3 455 certificates and 1 059 diplomas) on New Zealand’s
Register of Quality Assured Qualifications. Some considered that the large number reduces their
relevance to employers, who in some cases may turn to other mechanisms for making judgements
about a potential employee’s skills (for example, testimonials or retesting themselves). This side of
the discussion called for an overhaul that would produce greater alignment and simplification.
Another point of view argued that the large number is the result of the way in which the system is
administered (recording everything) and that there is no evidence that the large number of
qualifications per se is causing any serious problems. This view argued that regional qualifications
that meet national standards (one of the causes of the number of qualifications) provide valuable
flexibility. This issue was reviewed by the New Zealand Qualifications Authority and the Ministry of
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Education (see, for example, Vermillion-Peirce and Grice, 2009, and Vermillion-Peirce and Parker,
2009), which has led to seven recommendations (NZQA, 2009, p. 3):
2.4
1.
Develop a unified New Zealand qualifications framework.
2.
Require the use of existing quality assured qualifications and change the design rules for
National (standards-based) and New Zealand (course-based) qualifications to allow for more
inclusion of local components.
3.
Require mandatory periodic reviews of qualifications to determine whether they are still fitfor-purpose.
4.
Strengthen and standardise qualification outcome statement requirements.
5.
Introduce a mandatory pre-development assessment stage for qualification developers.
6.
Strengthen recognised industry involvement in qualification development.
7.
Provide the public with clear information about whether a qualification is active, inactive or
closed.
Outcomes of training and competence building activities
The final thematic discussion began with the survey result that most participants recognised
beneficial outcomes of training or/and competence building activities for their firm, but fewer
reported benefits for their industry or the local region (see Figures 14 and 15 for formal training and
Figures 25 and 26 for informal training). Nevertheless there was some recognition that industry and
regional innovation and competitiveness are enhanced by formal and informal training. Workshop
participants were asked to consider: whether local firms are visibly influencing skills levels in the
local workforce, and whether this is having any regional impact; whether the region is "specialising"
in certain skills; and whether the region is missing out if firms are only able to invest in training that
produces immediate benefits to their business.
Participants were able to suggest specific examples where the region has clusters of specialist
skills being actively developed in Canterbury, including electronics and software (the high tech
cluster), performing arts, biotech and medical instrumentation, manufacturing and innovative foods.
Reference was made to a recent Department of Labour report on knowledge intensive sectors that had
Canterbury well behind Auckland and Wellington, but which drew the following conclusions about
Christchurch City (Department of Labour, 2009, p. 29):
The Canterbury region is, unsurprisingly, dominated by Christchurch City in
terms of its knowledge economy (chart 3.16). Christchurch City has both the
highest number of KI [knowledge intensive] sector workers, and the highest
proportion of its workforce in these sectors (30%).
Christchurch City has seen strong employment growth of 50% in its private KI
sectors over the period 2000-08. This is considerably faster growth than the
growth in either Auckland City or Wellington City, and is well ahead of the
overall national figure of 35% growth. …
Christchurch is in a promising position for further development with an
international airport, two universities and two polytechnics. If a higher
proportion of South Island graduates can be attracted to develop their careers
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CHAPTER 2: THE OECD WORKSHOP IN CHRISTCHURCH – 53
and business ideas in Christchurch then there will be a steady flow of high
calibre workers available to local businesses.
There were Canterbury examples from the primary sector. Dairy farmers in North Canterbury had
been experiencing difficulties in attracting staff, and so developed a collective code of practice for
employers that including training for management as well as staff). Fonterra (a very large firm
responsible for more than a third of international dairy trade and co-operatively owned by about 96%
of all New Zealand dairy farmers) has a skills training package that has had an impact in small towns
with a Fonterra factory. Wine growers in North Canterbury have collaborated to include a strong
sustainability focus in their production and marketing.
Attention turned to informal competence building activities. It was suggested that these tend to be
firm based as part of an enterprise’s strategy for building and maintaining competitive advantage, and
for retained valued staff. A common activity involves drawing on in-house skills to raise the
capabilities of other members of the staff, or to capture potential productivity improvements
recognised by employees. Consequently, it can be difficult to measure the benefits from informal
training activities, especially since firms do not want to share their innovative practices with
competitors.
Nevertheless, the workshop did consider that there are advantages in thinking further about how to
assist SMEs with informal competence building activities. A firm relying exclusively on in-house
skills may simply reinforce the internal status quo and not adopt cutting-edge technologies.
Networking, finding areas of common need where collaboration would be cost-effective, using
external facilitation by a credible facilitator, and involving tertiary education organisations (private
and public) may all have roles to play. This raises questions of who pays, and how the balance should
be struck among the contributions of employers, employees and the government.
2.5
Summary
Reflecting on the material produced in the OECD workshop, it would appear to be premature to
speak of a single skills and training ecosystem in Christchurch city or the wider Canterbury region.
Some sectors have developed good connections between tertiary educators and employers,
particularly in formal training for people in occupations connected to health and the skilled trades.
There are also examples of collaboration among training providers such as the Canterbury Tertiary
Alliance and the Canterbury Training Providers Association. Nevertheless, there was a general view
that in many cases partnerships are fragmented, with networks being independent of each other and
largely dictated by funding sources.
The OECD workshop took place in Christchurch shortly after the New Zealand government’s
three-year "regional facilitation" programme had concluded. This programme had sought to foster
connections between tertiary educators and other stakeholders in the local labour market. This
initiative had met with mixed success. A better understanding of local skill needs had been produced,
but the global recession meant this was no longer directly relevant in the immediate short-term. It had
been particularly difficult to achieve involvement from SMEs in the process, for all the well-known
reasons that have motivated this report.
A potentially fruitful point of tension in the local skills and training environment in New Zealand
lies at the interface between industry training organisations (ITOs) and institutes of technology or
polytechnics (ITPs). The ITOs have a statutory responsibility to provide training leadership in their
industry, while ITPs have a mandate to provide training that is relevant for their region. In the OECD
workshop, it was noted that not all ITOs are represented in the Canterbury region (and that there is no
ITO for the information and communications technology sector). There was also some controversy
about the extent of regional qualifications registered on New Zealand’s national Register of Quality
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Assured Qualifications, with some participants arguing that there are too many, reducing their
relevance to employers.
Within this institutional framework, it was recognised that private training enterprises (PTEs)
could sometimes be more flexible in providing business-determined programmes.
The workshop identified three particular issues for young people. First, young people may not be
getting the full picture about trades training paths from careers guidance at school. Second, there is a
group of vulnerable young people who have dropped out of learning at school and need to be
reengaged with training options. Third, within a firm a young person may benefit greatly from
training but not be in a position where they can push themselves forward to be considered for training.
The workshop struggled to identify the extent of knowledge intensive service activities being used
by SMEs in the Canterbury region. Participants did consider that there are advantages in thinking
further about how to assist SMEs with informal competence building activities since firms relying
exclusively on in-house skills may simply reinforce the internal status quo. But it was difficult to
suggest positive ways in which this might be achieved, or how its success might be measured.
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CHAPTER 3: THE CANTERBURY SME CASE STUDIES – 55
Chapter 3 – The Canterbury SME Case Studies
In order to gain further insights into the Canterbury regional skills ecosystem, the author
interviewed managers of five small to medium sized enterprises. The interviews focused on how the
SME approached formal training and informal competence building for its staff. The SMEs were
chosen to give a range of sectors and enterprise size, but they also displayed significant differences in
their approaches to training and competence building that add some considerable richness to the new
data collected in the Canterbury survey and the discussion in the Christchurch workshop. Table 5 lists
the names of the firms, their sectors and their number of employees.
Table 5. The SMEs interviewed as case studies
3.1
Enterprise
Sector
Number of Employees
EFI Engineering Ltd
Custom Engineering
12
Independent Line Services Ltd
Electricity Network Services
41
Windflow Technology Ltd
Wind Turbine Design and Manufacture
60
Alchemy Group Ltd
Purpose Built Software Systems
12
Lakewood Court Rest Home and Straven House
Aged Care Accommodation
51
EFI Engineering Ltd
EFI Engineering was set up in 1995 by Grahame and Helen Wright as a result of the major
restructuring in the New Zealand engineering industry that followed the 1987 share market crash. The
firm specialises in custom design and manufacture of quality plant and machinery, and is also
committed to general engineering and maintenance work both in house and on site. It has been
involved in development work for automated mooring systems of ships at ports, repair work and
maintenance of large machinery, and design and manufacture of bakery equipment. The versatility
required to do this type of custom work requires its twelve staff to be practical and skilled trades
people, able find effective solutions to unusual problems.
The manager, Grahame Wright, had considerable experience in training apprentices when he was
at Savage Engineering – a much larger engineering firm that had closed down after the 1987 crash.
They used to get 40 applicants a year, the two most academically gifted of whom they would select as
apprentices. The firm came to realise, however, that it was effectively training people to become
managers in other enterprises since these apprentices did not want to be trades people for any longer
than they needed. So they changed their selection criteria to aim for people who were less
academically inclined but who showed abilities with their hands and a real enthusiasm for working
with machinery. This still represents the type of person who suits his current business, which has
some important implications for his approach to training.
First, Wright is passionate about staff training, and estimates that he has spent between
NZD 20 000 and NZD 25 000 in direct training costs, not including the opportunity costs of time
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away from the factory floor. Nevertheless, he no longer finds value in formal apprenticeships. He
cites the following problems:
•
It is impossible for him to release staff for a six week block course.
•
If a staff member is released to get a qualification, he could resign to go to another firm next
week.
•
Most of the staff do not require the whole programme; just the introductory material (at least
initially).
•
The apprenticeship curriculum is designed for the needs of big firms, and covers too much
too quickly.
•
Read-write learning at a fast pace are not useful for staff who are practical, who think in
pictures (not maths), or who need time to absorb new material.
Instead, the firm uses a private training firm, VJ Henderson Associates, which Wright describes as
a very high quality educator, teaching small classes. This firm is based in Dunedin (outside the
Canterbury region), but was chosen by Wright because he finds that this provider understands his
need to develop skills in his staff that will be directly beneficial to his business. VJ Henderson
Associates offers a range of one-day courses in Christchurch that suitable staff can be selected to
attend. They also come on-site and offer training on specific issues important for the firm. Anyone on
the staff who wants to participate is eligible.
Wright reported some clear benefits from his partnership with VJ Henderson Associates:
•
Perhaps the most important benefit is that this form of training "develops the right skills for
the right staff". This means his employees are developing firm-specific skills, so that the
firm grows and does not have to be concerned about workers being poached by competitors.
•
It teaches people to think not just like engineers, but develops wider communication skills
and teamwork among his employees.
•
It encourages and rewards "independent" workers, although Wright has been careful to
address "tall poppy syndrome" reactions when one worker advances quickly.
•
It is highly motivating to the staff, and turnover is very low. As a result, Wright comments
that "my staff are the best team I have ever worked with".
There are benefits to the staff. Wright gives as an example one of his employees who came into
the firm with no qualifications at all. He started with night courses in mathematics at his local high
school, and then enrolled in a computer assisted design module at the Christchurch Polytechnic
Institute of Technology. At first the firm paid half his enrolment fee, and then reimbursed him for the
remaining half on completion. The firm then began paying all his fees as he continued his studies.
This employee has now been with the firm for six or seven years, and has been promoted to a very
senior position.
One of the issues raised in the OECD survey concerns whether firms are making changes in
response to new laws about environmental issues. Wright’s answer to this line of question was an
interesting one:
This doesn’t have anything to do with us. Mind you I am introducing a new
machine that will filter all the water we put down our drains. But this isn’t in
response to any law change; I have wanted to do this for a long time. I
couldn’t fit the machine in before, but we have just redesigned the factory floor
and now it will work.
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In the author’s experience, this attitude would be common among SMEs in Canterbury. Business
people have an appreciation of the importance of avoiding damage to the natural environment, and
will take steps to do so if it is practical and affordable.
3.2
Independent Line Services Ltd
•
Independent Line Services was established in 1995 as an electricity network contracting
company with an initial staff of four, including a trainee. It has grown to a staff of 41,
including three trainees, and has become one of New Zealand’s largest independent line
contractors. A large part of its work is contract work for Orion New Zealand Limited, which
owns and operates the electricity distribution network in central Canterbury. Training is an
essential part of the firm’s business plan, and is considered by its managing director, Matt
Southern, as an investment in the firm’s future for three reasons.
•
The company constructs, repairs and maintains high voltage lines where a mistake can be
fatal. Health and safety is a daily consideration, reinforced by the industry’s regulatory
framework.
•
Staff retention is greatly improved if the company offers a learning environment and career
paths that supports staff in their personal development and recognises their learning
attainments.
•
The age structure of the company’s staff means that it needs to train young people now in
order to maintain the capability to deliver its skilled services in the future.
Training in the industry is organised by the Electricity Supply Industry Training Organisation
(ESITO), an organisation set up under the Industry Training Act 1992 to: set standards and register
qualifications on the National Qualifications Framework that meet the needs of the electricity supply
industry; manage training arrangements that enable employees in the industry to achieve these
standards and qualifications; and provide leadership to the industry on skill and training matters.
All of the company’s staff do the relevant training determined by ESITO in full. A large part of
the training takes place within the company, but it also includes participation in 6 week courses at the
Trades Innovation Institute of the Christchurch Polytechnic Institute of Technology (CPIT). The latter
is a significant cost to the firm in terms of time away from work, but Southern reports that the cost is
outweighed by improvements in labour productivity. The employees are offered one-on-one
mentoring within the firm to get them through the more academic parts of the coursework.
There are clear career paths within the firm that are opened up to workers as they gain their
qualifications. They become a "qualified man", and then leader of a two-person truck, and then leader
of a three-person truck. Attaining qualifications is celebrated within the firm, and leads to pay
increases.
Southern strongly supports the role of ESITO and CPIT. The strengths of the ITO system is that
everyone can access the ITO standards and qualifications regardless of size, its training programmes
are standardised, and it is industry focused rather than firm focused. There are, however, some
weaknesses: the curriculum can be hijacked by the larger firms and subsidies provided by the ITO for
credits achieved means training can be an income-earner for the employer, regardless of the outcomes
for staff. Southern has been an industry participant in some of the working groups that established the
ESITO programmes, and someone from ESITO consults with him at least once a year.
Phil Agnew, the Head of the Trades Innovation Institute at CPIT, had fostered a very strong
partnership between the Institute and local electricity supply companies. This has resulted in relevant
and practical training for the industry, aided by substantial investment in a purpose built facility at the
Institute that replicates a real work environment.
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There is a statutory requirement for refresher training on health and safety in the electricity supply
industry. The firm meets this requirement with regular in-house training provided by an independent
educator. To keep these sessions interesting they normally include some other relevant material. This
does not include "soft skills" training in areas such as communication or customer service. These
elements are regarded as part of the culture of the company, emphasised in everything it does,
reinforced at every opportunity by Southern and the other managers. The firm aims to recruit for these
capabilities, focusing on appointing applicants who have the right personalities and people skills for
the company.
Southern explicitly links the strong training culture in his enterprise with innovation. The industry
has fixed standards for the quality of the work, so that competitive advantage is built on finding ways
to meet those standards more efficiently. Workers at any level of the firm who have innovative ideas
know that they will be listened to and rewarded by management. This is further encouraged by
monthly meetings of the whole company, and an open door policy operated by managers. It is all part
of the team culture that is an essential element of work in the sector.
When asked if the firm has made any changes in response to new laws about environmental
issues, Southern replied, “We are required to use "sustainable practices", but this isn’t having a strong
effect at present. There is a push to put lines underground, and we are preparing for that to continue.
Otherwise there is not much for the green revolution affecting us.”
3.3
Windflow Technology Ltd
Windflow Technology was floated as a shareholder company in 2001. It was founded by its Chief
Executive Officer, Geoff Henderson, on the propositions that demand for renewable energy sources
represented a new economy and sustainable future and that engineering innovation was needed to
develop a more cost-effective and reliable wind turbine capable of harnessing strong and turbulent
winds such as those experienced in New Zealand. The firm is primarily a wind turbine design and
assembly company. Its main capabilities are in: engineering design, research and development;
production engineering; and wind farm development, operations and maintenance. Its primary
technology is the Windflow 500 wind turbine that has been designed to include several technological,
economic and environmental advantages, particularly for small to medium sized wind farms.
The firm had 15 staff in April 2007, which had increased to 50 in April 2008 and to 60 people by
the middle of 2009. This period of fast growth has meant significant changes to the way in which the
enterprise approaches skills training within the business, which is under the direction of its quality and
training manager, Tim Armitage. Armitage is a Chartered Professional Engineer and an accredited
assessor for the Institute of Professional Engineers of New Zealand (IPENZ). He has 30 years of
experience in training staff in New Zealand and overseas.
It was relatively easy to manage the training when there were only a dozen or so employees in
2006, since he was able to know them personally and identify where training of a staff member could
fill a capability gap in the firm. The increase to 60 employees has required a shift to a more formal
system which he was beginning to implement in 2009. The new system requires each position in the
enterprise to be evaluated for the competencies required of the employee holding that position. People
appointed to a position must either have those competencies, or have the capacity to gain them within
twelve months. Each employee discusses their training needs with their line manager to draft an
individual training plan each year, which goes to the quality and training manager for oversight.
Training options include:
•
pairing up with a mentor in the enterprise;
•
enrolment in a block course at the Christchurch Polytechnic Institute of Technology;
•
enrolment in a graduate course at the University of Canterbury;
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•
participation in an external training day at an industry event;
•
provision of in-house training by an expert on the capability; and
•
attendance at a relevant seminar or conference in the staff member’s field.
Armitage gave specific examples of training that had been arranged under these headings. A staff
member had been mentored by himself to study for a qualification in professional management. There
is usually at least one person on staff enrolled in studies towards a trade certificate in order to become
a registered electrician. This training is organised through the Electrotechnology Industry Training
Organisation (ETITO). Two staff members are enrolled in a graduate management diploma
programme at the University of Canterbury. There are advantages in having staff members
networking with other industry participants at external training days or seminars (such as breakfasts
with a guest speaker organised by the Canterbury Employers’ Chamber of Commerce or the New
Zealand Institute of Management), but when the training plans reveals similar needs among several
staff it is more efficient to search for a suitable expert to provide the training in-house. An example of
the latter is the health and safety training on working safely at height. In all of these cases, it is
company policy to pay for any training that is recognised as relevant for the current or future needs of
the business.
A feature of these formal training events is that they are typically directed towards increasing
skills to meet urgent production or business issues faced by the company. A specific example is that
senior management recognised a need to prepare an integrated strategic plan and budget. The
company engaged experts from the University of Canterbury to provide structured in-house training
for the management team so that they were able to learn the necessary skills as they developed the
integrated document. The company also recognises it needs more project management skills, and is
paying the training costs of people to develop these capabilities.
Informal learning is a vital part of the enterprise’s innovation culture. Indeed, one of the features
of that attracts people to join the company is the opportunity to work closely with the founder, Geoff
Henderson, who is recognised for expertise and leadership in wind power engineering. The
engineering staff work in teams to solve problems, which encourages cross fertilisation of ideas
among colleagues. Suppliers of materials to the enterprise often offer training in the use of their
materials. The company’s quality assurance processes include peer review by a world expert to
achieve product certification from the International Electrotechnical Commission. The company is
moving towards adopting LEAN manufacturing principals so that workers on the factory floor are
involved in identifying ways to eliminate waste and to organise their workstations more efficiently.
3.4
Alchemy Group Ltd
Alchemy Group Ltd was founded in 1996 by Steve Smith (who is the Managing Director) and
Dean Ashby. They were joined by David Eaves in 1998 and Howard Nicholls in 2000. The company
specialises in providing purpose built software systems for clients, with capabilities to tackle a wide
range of applications. It employs 12 staff on an ongoing basis, and also employs contractors to work
on specific projects. A system jointly built by Airways New Zealand and Alchemy won two
categories in the Computerworld Excellence Awards 2008. The Collaborative Arrivals Manager, a
web application that interacts with the air traffic management system to improve the management of
aircraft flight arrival times and so reduce delays for passengers, won awards for "Excellence in the
Use of ICT in Customer Service" and "Best Sustainable ICT Project".
From its earliest days, Alchemy has held a strong ethos of supporting the software industry in
Canterbury. Steve Smith was the founding chairperson of Canterbury Software Incorporated (CSI),
succeeded on the committee by Howard Nicholls. CSI is a voluntary association of software
producers and support agencies working together to help innovative software companies in
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Canterbury commercialise their products and improve service relationships. Nicholls has been
involved in helping one of the local universities design its computer science curriculum, serving for
several years on the industry liaison committee of Lincoln University’s applied computing group. He
was a member of a major review of its computing programme in 2005, which led to a new Bachelor
of Software and Information Technology degree in 2007.
These past involvements represented a substantial commitment of resources from a small firm,
which has not been possible to sustain as sales have grown. Nevertheless, the firm still believes these
are good things to do. It is important for the industry and for firms like Alchemy that the region builds
world-class capability for innovative software design, and exercising leadership in the sector is very
good exposure for the firm and its principles. Potential customers and potential employees come to
hear of the firm and its directors, either directly or through recommendations from people who know
about their contributions.
The firm is still at a size where it does not yet have a formal or comprehensive system of staff
appraisal or training plans. This is recognised as an area for development of the firm’s systems.
Required skills depend on what projects the company is undertaking, and there are three options if a
skills gap is identified: (1) train a current staff member to develop the required skill; (2) seek to recruit
a new staff member who already has the required skill; or (3) employ a contractor on a short-term
basis to do the work requiring the missing skill. The firm has used all three options in recent years.
It is not easy to recruit people locally. The company is often seeking specialist skills, and they also
require a successful applicant to have some work experience since graduation. Because the firm is
small, its employees need to be productive as soon as they are appointed. The firm has employed
graduates from the three local public tertiary institutions, which provide a satisfactory range of
graduates covering a wide cross-section of knowledge and skill-sets in software development. It has
also had several students on internships to work on very specific mini-projects. The firm is very open
to recruitment from overseas, although it requires candidates to have already applied to immigrate to
New Zealand before they are considered.
If a skills gap is identified in the current staff, the first thought is to see if one of the tertiary
institutions offers a short course on the topic. Some time ago, for example, one of the firm’s
employees was sponsored to enrol in a Masters degree at the University of Canterbury to deepen their
knowledge in a particular area.
Generally speaking, however, the firm finds that the universities and CPIT do not offer short
courses that would meet its specialist needs. The firm then looks at courses offered by private trainers
such as Software Education, an Australasian firm with offices in Brisbane, Sydney and Wellington.
Staff have participated in these courses, which has provided new skills, but the firms finds it an
expensive option, especially if it is wanting a team of staff members to develop the skills or if the
course involves travel to Wellington or Sydney. A three day course would cost about NZD 2 500
(including travel) plus the opportunity cost of releasing the staff members from work when the
business has lots of work to do and deadlines to meet. It is harder for a smaller enterprise to take "time
out" even if it would be worth it in the long-run.
A more effective option can be to recruit a new staff member who already has the required skills
(backed up with work experience) who can participate in a team project that will allow other staff
members to learn from their new colleague. This involves staff in self-study based on recommended
reading of texts or visits to relevant websites, supported by a mentor with the specialist knowledge.
This need not be linked to a specific project. Any new staff member will have a range of skills that
might allow the firm to expand into new areas if other staff members build capabilities in the same
area through self-study.
Staff participate in local industry events, including conferences, seminars and talks. Important
examples include the Test Professionals Network of the New Zealand Computer Society and the
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Canterbury Java Users Group. These events focus on technical training to keep people up-to-date with
the latest developments in relevant technologies. The firm does not involve its staff in training on
items such as customer relations, but it does involve people in weekly reviews of the latest projects’
outputs. These reviews seek to identify what has gone well and what has not, so that the firm is
continuously learning how to improve its processes and performance.
3.5
Lakewood Court Rest Home and Straven House
David O’Neill and Mary Anne Beckingsale are the owners and managers of two facilities
providing accommodation and care for elderly patients. Lakewood Court Rest Home offers dementia
care for up to 36 residents, while Straven House offers rest home care for up to 24 residents. The two
facilities employ 51 staff in total. Most of the employees are part-time so that these staff represent about
18 full-time equivalent employees.
The businesses provide services that are subsidised by the New Zealand Government through the
Canterbury District Health Board (Canterbury DHB). There are 21 DHBs in New Zealand, with each
one for providing or purchasing Government funded health care services for the population of a
specific geographical area. The Canterbury DHB enters into purchase contracts with facilities such as
the Lakewood Court Rest Home and Straven House, and these contracts set out standards that much
be met by the supplier. These standards include requirements for trained staff, plus training updates
that must be regularly undertaken by the staff (especially refresher training to maintain First Aid
Certificates). Suppliers must report on their standards, and are subject to audit by the DHB.
These arrangements are reflected in the employment contracts signed by employees in Lakewood
Court Rest Home and Straven House. Staff are required to participate in in-house training to meet the
standards set out in the DHB contract. This includes 12 scheduled training sessions during the year,
plus any other in-house training sessions that may be arranged. Staff can also be directed to take part
in a training event or course if a gap in their capabilities is identified during an annual performance
review or as a consequence of a workplace incident requiring attention.
The in-house training is provided by people with expertise from a wide range of sources, such as
Alzheimers New Zealand or the New Zealand Continence Association. Particularly important,
because it is recognised by the Canterbury DHB, is the Aged Care Education programme (ACE)
designed by the Health Ed Trust. This programme is approved by the New Zealand Qualifications
Authority and carries unit standards. The employer pays once for the relevant resources – manuals,
workbooks, DVDs (or videos), assessments and answers – and then there is a small processing fee for
each student in each programme. The supplied material is backed up by telephone support during
office hours. When ACE programmes are completed, the employee qualifies for a National Certificate
in Support of the Older Person or a National Certificate in Community Support Services.
There is some resistance from staff to participating in the regular in-house training, although this
is a requirement in their employment contracts. The employers have introduced a "mystery prize
draw" at each training event to offset the reluctance of some to participate.
Managers and senior staff in both institutions are expected to provide on-the-job training to their
colleagues. This is provided in work situations to ensure that policies and procedures are being
properly carried out, with particular attention to resident safety and well-being.
There are some limited opportunities for staff training at an external institution. On one occasion
the employers paid for a staff member to attend a course in another city, and it is possible to enrol in a
relevant course at the Christchurch Polytechnic Institute of Technology. The main issue is getting
coverage to release the staff member for the time away.
The owners participate in their own training and professional development, particularly by
attending the annual conference of the New Zealand Aged Care Association. The Association also
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
62 – CHAPTER 3: THE CANTERBURY SME CASE STUDIES
offers occasional training and professional development days for caregivers, enrolled or registered
nurses, and managers.
There are some indirect benefits from the training to the Lakewood Court Rest Home and Straven
House. Poorly trained staff would provide poor care, which would be reflected in lower occupancy
rates. There are also costs, particularly financial costs in arranging for trainers, paying for training
materials and arranging for staff cover for people involved in training. Given these considerations, the
standards set out in the contract with the Canterbury DHB are decisive. The training programmes are
managed to ensure that these standards are continuously met.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
PART III: ANALYSIS OF MAJOR THEMES AND CONCLUSIONS – 63
Part III
Analysis of Major Themes and Conclusions
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 4: MAJOR THEMES – 65
Chapter 4 – Major Themes
The purpose of this project has been to gather and analyse New Zealand data on SMEs labour
force participation in formal and informal alternative ways training, analyse the impact of training and
skills development activities in firms, and examine local approaches to learn how incentives can be
provided to employers and employees for training activities that generate results for all employees.
The research involved a web-based survey of SMEs in Canterbury, a workshop on the regional skills
and training ecosystem in Canterbury, and five case studies of SMEs to give greater depth to the other
gathered data. This chapter presents the major themes to emerge from this research. It begins with
further analysis of the difference between the highly innovative firms and the other firms in the webbased survey. The chapter then discusses issues around training in SMEs, focusing in particular on the
differences between formal and informal training and on the differences between the training of
medium to high skilled workers and the training of low skilled workers. This is followed by a section
on informal training, and some important differences compared to formal education. The chapter
finishes with a discussion of other issues revealed in the research. Chapter 5 then presents conclusions
for future research and policy development on leveraging training and skills development in SMEs.
4.1
Innovation and training
The discussion of Figure 6 in Chapter 1 explained that the more highly innovative firms in the
survey sample were defined as those that reported they had made at least one radical innovation or
had made serial innovations in three or four of the four dimensions (product, process, management or
technology) in the previous twelve months. This resulted in just over half of the sample, 37 out of
72 firms, being defined as highly innovative enterprises. That discussion also reported that these 37
highly innovative enterprises in the sample tended to be older and in a mid-range size band:
•
76% of the innovative firms were 10 years or older, compared to 57% of the less innovative
firms.
•
35% of the innovative firms had 10-19 employees, compared to 20% of the less innovative
firms.
Further analysis of the data reveals other important differences in the approach to training adopted
by the highly innovative firms compared to the other firms in the sample. First, there was a small
difference in the likelihood of having a training budget, but the highly innovative firms were much
more likely to have a formal training and career development plan. This is shown in Figure 33, which
records that 54.1% of the highly innovative firms reported they had a formal plan, while only 40.0%
of the remaining firms reported a formal training and career development plan.
The highly innovative firms were more likely to employ older staff (50 years of age or older). The
comparison is shown in Figure 34. The percentage of the workforces aged between 24 and 49 years is
similar in the two subsamples, but the high innovation firms reported only 9.0% of their workforce
aged below 24 (excluding the "not known" responses), compared to 17.0% for the low innovation
firms.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
66 – CHAPTER 4: MAJOR THEMES
Figure 33.
Training arrangements for high and low innovation firms
High Innovation
Low Innovation
80%
64.9%
60.0%
60%
54.1%
40.0%
40%
20%
0%
Training Plan
Figure 34.
Training Budget
Age structure of high and low innovation firms
High Innovation
Low Innovation
80%
68.5% 69.5%
60%
40%
20.2%
17.0%
20%
13.3%
9.0%
2.3% 0.2%
0%
<24 years
24-49 years
50-64 years
>64 years
Note: These data exclude employees whose age was reported as not known
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 4: MAJOR THEMES – 67
Figure 35.
Types of formal training in high and low innovation firms (%)
High Innovation
Business Planning
Marketing/Promotion
Research/Development
Accounting/Finance
Information/Technology
Human Resources
Legal Courses
E-Commerce
Health & Safety
Job-Specific Technical
Language Courses
Social Skills
Entrepreneurship
60.0
62.2
37.1
35.1
14.3
73.0
43.2
40.0
8.6
56.8
42.9
43.2
28.6
21.6
17.1
24.3
43.2
40.0
83.8
60.0
0.0
10.8
8.6
0
Figure 36.
Low Innovation
21.6
20.0
24.3
20
40
60
80
Types of informal training in high and low innovation firms (%)
High Innovation
Low Innovation
Business Planning
Marketing/Promotion
Research/Development
Accounting/Finance
Information/Technology
Human Resources
Legal Courses
E-Commerce
Health & Safety
Job-Specific Technical
Language Courses
Social Skills
Entrepreneurship
57.1
51.4
51.4
31.4
34.3
20.0
81.1
70.3
43.2
56.8
40.0
40.5
40.0
35.1
43.2
42.9
40.0
51.4
59.5
62.9
21.6
22.9
21.6
22.9
48.6
0
20
40
59.5
60
80
Figures 35 and 36 show the percentage of firms who report that their staff are involved in the
different categories of capability building, analysed by formal training and by other informal training
activities. No distinction is made in these figures between one-off training and regular training. The
highly innovative firms were more likely than the low innovation firms to report in the survey that
their staff are involved in training under almost every heading. There were three exceptions in
informal capability building: a slightly greater percentage of the low innovation firms reported
informal capability building in language courses and in social skills, and a greater difference in jobspecific technical skills (62.9%, compared to 59.5% of the high innovation firms).
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
68 – CHAPTER 4: MAJOR THEMES
The last observation may be a reflection that in the area of job-specific technical skills the more
innovative firms tend to put more weight on formal training than on informal capability building
activities. 83.8% of the highly innovative firms indicated that their staff are involved in formal
training in job-specific technical skills, which is the highest value in the two figures. This was more
than 20 percentage points higher than for the low innovation firms (60.0%) and also more than 20
percentage points higher than the proportion of highly innovative firms reporting informal training in
these skills (59.5%).
As might be expected, the highly innovative firms were much more likely than the others to report
formal and informal training related to research and development. There is a very interesting
comparison in the differences reported in training for marketing and promotion. Among the highly
innovative firms, 62.2% reported staff involvement in formal marketing and promotion training,
compared to only 37.1% among the low innovation firms. This was the biggest gap between the two
groups of firms in the two figures. The gap was smaller for informal capability building activities
associated with marketing and promotion, but still large (70.3% of the high innovation firms and
51.4% of the low innovation firms).
This comparison suggests that a feature of the highly innovative firms may be that they are more
driven by the search for new market opportunities (hence a greater need for staff training in marketing
and promotion) than the low innovation firms. This might also explain why the highly innovative
firms are more likely to be involved in formal or informal training for business planning. Further
evidence is offered in Figure 37, which compares the sources of informal training in the two groups of
firms. Both groups indicated that clients were the most important sources, but the proportion of highly
innovative firms giving this indication was 86.5%, compared to 74.3% of the low innovation firms.
Figure 37.
Sources of informal training in high and low innovation firms (%)
High Innovation
Low Innovation
78.4
Co-workers
65.7
45.9
45.7
Suppliers
86.5
Clients
Consultants
17.1
21.6
14.3
10.8
8.6
24.3
20.0
24.3
5.7
Competitors
Academics
Industry Cluster
Value Chain
Industry Assns
Govt Depts
17.1
32.4
40.5
42.9
37.8
54.1
48.6
Informal Networks
0
20
74.3
40
60
80
These insights are also suggested by the five case studies in Chapter 3. EFI Engineering Ltd and
Alchemy Group Ltd are in the size range identified in the survey as more likely to be highly
innovative, while Windflow Technology Ltd was in that range in mid 2007 before expanding
considerably over the next two years. In all three cases, training was considered essential for the
enterprise’s business and was directed to developing capabilities that would meet immediate business
issues or market expectations. The other two businesses in the case studies were providing services to
a dominant purchaser (Orion New Zealand Limited and the Canterbury District Health Board
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CHAPTER 4: MAJOR THEMES – 69
respectively). In both cases the training framework was set by the firm’s statutory or contract
obligations to maintain health and safety standards. Innovation might be a consequence of this
framework (and in the case of Independent Line Services, actively encouraged), but was more likely
to be incremental innovation in processes rather than radical innovation as reported in the project’s
other three case studies.
4.2
Training issues in SMEs
The results from the web-based survey reveal that the level of staff training is an issue for
Canterbury SMEs. Evidence for this observation includes:
•
50% of the respondents reported they had “desired training not carried out” in the previous
twelve months.
•
50% of the respondents identified that their business needed training in at least five different
areas (out of seven).
•
53% of the respondents reported that they have no formal training plan.
•
63% of the respondents reported an annual training budget, but only 24% said this was
greater than NZD 5 000.
•
68% of the respondents reported that their firm has no apprentices or trainees.
•
69% of the respondents reported “some need” for management training, and 19% reported
“high need” for entrepreneurial training.
These results were generally supported by the participants in the Canterbury training ecosystem
workshop held in Christchurch on 1 July 2009. Indeed, the suggestion was that these results may
underestimate the training issues since managers with a greater interest in training are more likely to
have responded to a survey of this type.
The survey suggested that formal training and informal capability building are dominated by two
or three areas, as listed in Table 6. With respect to formal training, 72.2% of the respondents reported
their staff were involved in job-specific technical training, and 66.7% reported involvement in
business planning. These two areas were also among the top three for informal capability building
activities (61.1% and 69.4% respectively), joined by informal training in marketing/promotion
activities (also 61.1%). Business planning, marketing and promotion are knowledge intensive service
activities (KISA; defined in the introduction of this report); their appearance at the top of the list for
informal training highlights the importance of this new concept for SME analysis.
The evidence from the survey, the workshop and the case studies is that there is a good range of
education and training providers in the Canterbury region. This includes two universities and two
polytechnics, industry training organisations (many with a local office) and a large number of private
training establishments. Firms welcome the flexibility provided by this choice, which allows firms in
different sectors and at different stages of their growth to find training that suits their needs.
For smaller firms, this tends to be driven by immediate business needs, with an emphasis on firmspecific skills. This provides benefits to compensate for the direct costs and lost work-time from
worker participation in training, and also reduces the risk of losing a newly trained employee to
another firm in the industry. For medium-sized firms, it becomes more feasible to move to a
capability-based approach, in which employees are encouraged to increase their skills as part of the
enterprise’s drive to greater productivity.
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70 – CHAPTER 4: MAJOR THEMES
Table 6. Dominant areas of training in the survey
Area of Training
Regular
One-Off
Total
Job-specific technical training
30.6%
41.7%
72.2%
Business Planning
11.1%
55.6%
66.7%
Business Planning
31.9%
37.5%
69.4%
Marketing/Promotion
31.9%
29.2%
61.1%
Job-specific technical training
23.6%
37.5%
61.1%
Formal Training
Informal Capability Building Activities (KISA)
Firms were asked about barriers to formal training. The largest response for medium to high
skilled employees was high costs (25 firms, or 34.7%). This was followed by responses indicating the
difficulty of interrupting production (that is, "no time", reported by 18 firms) and of accessing training
at a suitable time or location (15 firms). A smaller number of responses were made for low skilled
employee training, although recall that only 25% of the sample reported that they employ workers in
the occupation categories identified as low skilled. The same three issues were mentioned for these
workers among the top four, but the top category was that the skills could be recruited (indicated by 9
firms).
The survey included a focus on informal training opportunities for youth. 54% of the firms
reported they did not have youth employees (that is, employees aged under 24), and a further 4% did
not know either their employees’ ages or their involvement in training. A further 20% reported they
had youth employees, but that these employees were not involved in informal training, so that only
22% of the firms in the sample reported they offer informal training to youth (see Figure 23).
4.3
The importance of informal alternative ways of training
A major motivation of the research presented in this report has been to better understand informal
training issues faced by SMEs. Recall from Section 1.1 that the OECD definition of informal training
"refers to learning resulting from daily activities related to work, family or leisure. It is not organised
or structured in terms of objectives, time or learning support. Informal learning is in most cases
unintentional from the learner’s perspective." This informal learning is carried out through
Knowledge Intensive Service Activities (KISA).
Respondents to the survey reported that informal training is important for their businesses. In
Figure 22, 39% stated that all of their staff are involved in informal training, and just over one-half
stated that 80% or more of staff were involved. Only 7% reported that less than one-fifth of their
workforce participated in informal training. Further, there was some evidence that firms had put more
emphasis on informal training as a response to the recession that had emerged in the previous twelve
months. This was presented in Figure 11. Generally this reported an increase in training over that
period, but also reported that 22 firms had increased their emphasis on informal learning instead of
formal learning (compared to one firm that had reduced this emphasis).
The most important sources of informal training were clients and co-workers, followed by
informal networks, suppliers and industry associations (see Figure 21). The informal training was
reported as leading to improved skills and other employee benefits (see Figures 24 and 25). The firms
emphasised improved management and technical skills for medium to high skilled staff, and improved
routine skills for low skilled staff. Both groups of staff benefited with improved social skills from
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CHAPTER 4: MAJOR THEMES – 71
informal training. Other employee benefits were reported as being largely captured by the medium to
high skilled staff, with half the firms saying that this group advanced their career through informal
training.
There are some interesting differences in the motivations for participation in informal training
compared to formal training (see Figures 30 and 31). In both cases, raising employee skills was cited
as one of the top two reasons, but Industry Association was offered as the first motivating factor for
formal training in contrast to its thirteenth position on the list for informal training. This is likely to
reflect the key and appreciated role of Industry Training Organisations (ITOs) in managing formal
training. Similarly, training regulations featured prominently among the motivations for formal
training, but not at all in informal training. Again this is likely to reflect the role of ITOs, but is also
likely to reflect the role of formal health and safety regulations in some industries or occupations.
There were considerably more responses explaining motivations for participation in informal
training than for formal training, and the top four categories were all business related: service needs;
employee skills; new product; and production needs. Each of these categories was indicated by more
than half of the survey’s respondents. This suggests that informal training is more directed towards
the firm’s business needs, rather than being framed by industry or regulatory requirements.
Figure 38 brings together data from Figures 14 and 20 to compare the firms’ reports of staff
participation in formal and informal training in the previous twelve months. The figure does not
repeat the distinctions between one-off and regular training, but generally speaking a greater
proportion of the training tended to be one-off in the formal training activities than in the informal
training activities.
In most categories, the number of positive responses is similar, but there are also some obvious
differences. More firms reported participation in formal training for job-specific technical skills
(52 firms), for example, than in informal training (44 firms). There were six categories where a
noticeably larger number of firms reported participation in informal training than participation in
formal training: marketing and promotion; research and development, legal advice; e-commerce;
language coaching; and entrepreneurship. The gap for the last category was particularly large. Only
12 firms reported that their staff had engaged in formal training activities for entrepreneurship, but
39 firms reported engagement in informal training activities.
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72 – CHAPTER 4: MAJOR THEMES
Figure 38.
Participation in formal and informal training in the last twelve months
Formal
Business Planning
Marketing/Promotion
Research/Development
Accounting/Finance
Information/Technology
Human Resources
Legal Advice
E-Commerce
Health & Safety
Job-Specific Technical
Language Coaching
Social Skills Devel.
Entrepreneurship
Informal
48
50
36
18
30
30
28
26
14
44
36
35
29
20
12
31
30
33
52
44
4
16
15
16
12
0
10
39
20
30
40
50
Despite these observations, there did not appear to be a strong view among the majority of the
respondents that informal training is better than formal education in any of the above categories (see
Figures 28 and 29). The highest level of support was for business planning by medium to high skilled
employees. 33 out of the 72 respondents indicated that informal training activities are better sources
of learning than formal courses, but even in this case the level of support was less than half (45.8%).
An interesting point in Figures 28 and 29 is the different emphasis given to informal training for
low skilled staff compared to medium to high skilled staff. For the low skilled employees, the top four
categories were social skills, health and safety, job-specific technical skills and language coaching.
For the medium to high skilled employees, the top four categories were business planning, marketing
and promotion, information and technology, and entrepreneurial skills. Thus the sample appeared to
support that firms value knowledge-intensive service activities for its more skilled staff, and that a
solid minority of managers think that informal training is a better source of learning than formal
courses in these areas.
Taken together, these elements of the survey suggest that entrepreneurial training for SME staff
could be an important subject for further research. The number of firms reporting that their staff are
engaged in informal training in entrepreneurship was three times the number reporting formal
training. It would be valuable to understand the reasons for this large gap (does it, for example, reflect
an inadequate supply of suitable formal courses), given that the majority of respondents did not report
a view that informal training is better than formal courses for learning these skills.
Figure 39 brings together data from Figures 15 and 26 to compare the reported benefits to the firm
from formal and informal training. The two sets of figures are very similar. In both cases, the two top
benefits were enhanced skills levels and productivity, followed by improved market position and
competitiveness. Improved innovation ranked fifth in both sets of data.
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CHAPTER 4: MAJOR THEMES – 73
Figure 39.
Benefits to the firm of formal and informal training
Formal
Informal
50
49
Productivity
41
Innovation
37
43
Market Position
46
42
Competitiveness
46
52
Skill Levels
49
20
Education Level
25
25
23
Trainer Expertise
0
4.4
10
20
30
40
50
Other issues from this research
The research identified some other issues related to the main themes discussed in the three
sections above. These are recorded in this final section for further consideration.
Participants in the survey were much clearer about firm benefits than industry or regional benefits
for both formal and informal training. It is not possible without further research to determine whether
this indicates that skills development genuinely has little benefit at an industry or regional level, or
whether this indicates that firms focus their attention only on the benefits to their own business (and
so they are unable to comment on any wider benefits). The feedback from the case studies is that the
five firms were willing to invest in skills training (formally or informally learned) that directly
benefited their business. Thus the manager of EFI Engineering, for example, reported using a private
trainer because it "develops the right skills for the right staff". This did not exclude the possibility of
releasing staff for general qualifications, but only if the qualification was directly relevant to the
business’s capabilities or regulatory framework.
There appears to be a particular issue for small firms as they grow beyond ten to twenty staff. The
case studies included small firms describing how they needed to move towards more formal training
systems within the enterprise as they expanded. These studies, as well as participants in the training
ecosystem workshop, suggested that the art of identifying skill needs, constructing training plans, and
linking learning achievements to remuneration is itself a skill.
Related to this question is the observation that in the survey sample, the highly innovative firms
were more likely to be 10 years or older, and to have 10-19 employees. It must be emphasised that
this was a small sample in a single region of New Zealand; nevertheless, these data suggest a
hypothesis that in order to grow successfully through this range, small firms have to introduce at least
one radical innovation or a range of incremental innovations across a number of their business and
production systems. There was evidence in support of this hypothesis in the case studies.
If this hypothesis is indeed valid, then the growing small firm may find it has some important skill
gaps that need to be filled urgently. This might be done by recruitment, by releasing a staff member
for formal education, or by engaging in informal training in-house or externally. In all cases, the
motivation is provided by the pressing business need, and it is not difficult to imagine that training in
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
74 – CHAPTER 4: MAJOR THEMES
creating or using knowledge-intensive service activities could be a priority for such a growing
enterprise. It would be valuable for more New Zealand research on this issue.
More generally, the research suggests that firms can adopt distinct strategies for expanding and
maintaining their skill capabilities. Some firms appear to focus on recruiting the right skills (including
– and perhaps especially – the "soft skills" such as ability to work in teams), while others appear to
focus on training for them. For some firms, the fostering of a learning culture within the workplace,
supported by strategic opportunities for formal education or informal training, is regarded as an
explicit source of competitive advantage. It can be a way of reducing staff turnover and of building a
team of employees who are capable of exercising initiative and solve business-related problems. For a
small firm, close contact with the firm’s skilled and experienced founder can be an important
attraction for employees wanting to develop their own skills and experience.
The training ecosystem workshop included a debate about the number of qualifications on New
Zealand’s Register of Quality Assured Qualifications. Different points of view were expressed about
the balance between “diverse provision” and “fragmented policies”. This issue is the subject of
current policy review in New Zealand, and so has not been considered further in this report.
Finally, a research issue being explored in the wider OECD research programme concerns the
impact of environmental issues on the business practice of SMEs. Questions related to this issue were
added to the survey after the first wave of invitations was sent to New Zealand firms to participate.
This means there is no large quantitative data on this issue, but the five case studies suggested that
environmental concerns are recognised by firms as part of acknowledged good practice, but without
any sense that environment-based regulations are having a major impact on their operations. It is,
however, not possible to put too much weight on this result, given the very small number of firms
interviewed.
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CHAPTER 5: CONCLUSIONS – 75
Chapter 5 – Conclusions
This chapter summarises the research findings presented this report and offers conclusions as the
basis for further research and policy development aimed at better leveraging training and skills
development in small to medium-sized enterprises in New Zealand. Before doing so, it is important to
reiterate the point made in the introductory chapter that the research in this report has included new
areas of enquiry in New Zealand, particularly in those parts of the research that sought to better
understand informal training issues faced by SMEs. Further, the study involved a relatively small
number of participants (both in the survey and in the case studies) drawn from just one region in the
country. Both points suggest the need for caution in drawing policy-related inferences from the
research findings.
It should also be noted, however, that this country report has been prepared as part of a wider
research programme on training and skills development in SMEs overseen by the Local Economic
and Employment Development (LEED) programme of the OECD. The survey was designed in
consultation with all the participant countries, drawing on best practice in the international literature
and other research programmes within the OECD. This feature of the study provides more confidence
in the research findings, especially when they are consistent with findings from other countries and in
other studies.
To recap, the study set out to identify ways of overcoming barriers to workforce development in
SMEs, acknowledging the important roles of both formal and informal learning process. This included
investigation of the following specific factors:
•
The nature and impact of training and skills development in firms, particularly focused on
skills development that naturally occurs during the process of engaging in knowledgeintensive or productivity enhancing service activities (termed KISA by the OECD);
•
The extent to which there are differences in the extent to which low qualified and older
workers have access to such opportunities and are considered to benefit from them, relative
to younger and higher-skilled workers;
•
The incentives on firms and employees to participate in both formal and informal training as
well as barriers to participation; and
•
How SMEs’ networks contribute to their participation in training and skills development
activities, using a "skills ecosystem" frame for analysis.
The research aimed to provide evidence that could be used to address some specific policy
questions:
•
How can SMEs be encouraged to increase participation of low skills and low-qualified older
workers in KISA? What incentives would work?
•
How might skills developed through informal learning be recognised in formal
qualifications?
•
How might SMES’ supply chains, and "skill ecosystems" contribute to achieving greater
participation in training and skill development activities in firms?
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76 – CHAPTER 5: CONCLUSIONS
5.1
General conclusions
At the most general level, the research presented in this report supports the hypothesis that small
and medium-sized enterprises undertake skills development using a variety of formal and informal
training sources. It records that skills developed through these diverse sources is viewed by firm
managers as being an important contributor to productivity and competitiveness, at least for individual
enterprises (there was less support for contributions at the industry or regional levels). More
specifically, the research has confirmed some findings from previous research in New Zealand,
including the following observations:
•
Raising skills in the labour force is viewed as strategically important as an significant driver
of productivity growth.
•
SMEs continue to face distinctive challenges in accessing training for employees, and many
see formal training as being primarily designed for larger firms.
•
Many firms have positive views of the role of Industry Training Organisations in facilitating
formal vocational education and training (VET) activities, while other, even quite small
firms continue to have a preference for arranging their own training in line with their
particular business needs. There is scope for Industry Training Organisations to further
expand their industry "reach" to include SMEs, and help SMEs to connect with both formal
and informal modes of skill development.
•
Private training establishments have an important role in providing training that is accessible
to small and medium-sized enterprises.
•
The large number of qualifications recognised in New Zealand presents difficulties to firms
navigating their way through the system to determine training opportunities.
•
A significant proportion of SMEs with training plans report that they have continued to
invest at planned levels of formal and informal training despite the recession.
In addition, the study affirms the value of Institutes of Technology and Polytechnics continuing to
engage regionally to facilitate the effective operation of regional "skill ecosystems"; that is,
strengthening connections between businesses and education providers aimed at ensuring skill supply
matches the nature and level of demand. This suggests that further work could systematically review
regional practice, the incentives operating and examples of success in the engagement between
education providers, their customers, business and the wider community.
The research provided some new data illuminating ways in which firms draw together
opportunities for skill development to build a more diverse set of learning opportunities than that
which formal training for qualifications can provide. For some this is more of a conscious choice than
for others, but for all there are transaction costs. These findings point to the potential benefit for firms
from greater facilitation in accessing these learning opportunities.
The New Zealand data has not been able to shed light on all of the project’s avenues of inquiry.
The very small sample size of firms employing young people, for example, meant it has not been
possible to draw robust conclusions on the issue of young people’s access to training. Furthermore,
significant numbers of middle-aged or older workers in the sample were relatively highly skilled, and
therefore, the research has not provided a strong basis for conclusions about the particular
circumstances of older, low skilled workers in SMEs.
5.2
Possible implications for policy development and further research
The findings in this report suggest some possible implications for further policy development in
New Zealand.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
CHAPTER 5: CONCLUSIONS – 77
•
Entrepreneurial skills: The Tertiary Education Commission could be encouraged to support
work on entrepreneurial skills that examines international practice in tertiary education
policies relating to the demand for, and supply of, formal entrepreneurship skills training,
which has a positive and high rate of return.
•
Knowledge-intensive service activities: The Government could continue to refine and better
link training assistance to SMEs, with the following objectives:
− Encouraging firms to understand the value of "learning while doing" for both employees
and firm capability, and to build it more deliberately into their business plans and into
their purchasing and training decisions for employees at all levels of skill, in the interests
of boosting firms’ capability and productivity levels;
− Facilitating a more closely connected suite of assistance aimed at reducing firms’ search
and decision costs on meeting needs for staff training and development;
− Facilitating access to a flexible suite of training alternatives that meet firms’ needs – not
limited to full qualification-bearing courses. There appears to be a particular need for this
among higher skilled and managerial staff.
•
Barriers and incentives to train: The Ministry of Education and the Tertiary Education
Commission could be encouraged to investigate the extent to which costs of formal training
(including fees, transport and opportunity costs) and time constraints are barriers to SMEs
investing in formal training of medium to high-skilled and managerial staff in SMEs, and
identify options for encouraging appropriate levels of training in these areas. In addition, the
Tertiary Education Commission could refine publicly available data about provider and
programme performance to better assist SMEs to match their training needs to the most
relevant providers and programmes.
•
There is also an important role for private sector business organisations to raise awareness,
champion and help better connect SMEs to skill development. All New Zealand businesses
must be able to engage in effective skills development – both formal and informal - and
have ready access to such opportunities. This applies to all levels of skills, including
management and innovation-related skills through technical and specialist skills to basic
social and language skills.
In addition, the findings have raised questions for further research, including:
•
Young people and informal training: More research could explore the extent to which
young people in the workplace participate in informal training activities; whether there are
any patterns relating to levels of pre-existing skills or qualifications; and the nature of
enterprise-level factors influencing any differences between their levels of participation and
those in other age cohorts.
•
Innovation and training: More research could explore the nature of the relationship
between pre-existing levels of innovation in a firm, and levels of investment in both formal
and informal training. A particular focus of this research might address the links between
innovation and training for small firms in New Zealand that are growing through the range
from 10 to 20 employees.
•
The national skills and training ecosystem: An important part of this project was the
workshop on the regional skills and training ecosystem in Canterbury (see Chapter 2). More
research could explore the nature of New Zealand’s national skills and training ecosystem
and whether there are opportunities for policy frameworks in secondary education, tertiary
education, industry training and life-long learning to be better integrated to strengthen
interaction between employers, employees, students and education or training providers.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
REFERENCES – 79
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Diploma Levels, New Zealand Qualifications Authority, Wellington.
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LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING – 81
Appendix: National Data on Enterprise Training
This report has provided new research on training in SMEs located in the Canterbury region of
New Zealand. To provide some context, this appendix offers some national data related to training in
firms. The first data source is the annual Business Operations Survey undertaken by Statistics
New Zealand, of which the latest published version was completed in 2008 (BOS 2008; see
www.stats.govt.nz/methods_and_services/information-releases/business-operations-survey.aspx). The
target population for BOS 2008 was live enterprise units on Statistics New Zealand’s Business Frame
that at the population selection date satisfied five criteria including that they:
•
Were economically significant enterprises (those that have an annual GST turnover figure of
greater than NZD 30 000);
•
Had six or more employees; and
•
Had been operating for one year or more.
Note that these criteria exclude businesses with five or fewer employees, which would have
excluded 17 of the firms from the Canterbury survey in Chapter 1 of this report (23.6%). Note also
that the survey has no upper bound on firm size, although some results are reported in band of firm
size, with the highest band being 100 employees or more. An enterprise is defined for the survey as a
business or service entity operating in New Zealand, such as a company, partnership, trust,
government department or agency, state-owned enterprise, university or self-employed individual.
The estimated population size was 36 075 enterprises. The sample design was a two-level
stratification according to ANZSIC industry and employment size groups. The response rate was 81.1
percent, which represented 5 543 businesses.
Section C of the survey is headed Business Strategy and Skills. Figure A1 shows the factors in
firms with 6 to 99 employees resulting in staff not having all the skills to do their job. Just over onehalf of the sample reported that all of their staff were fully skilled. The most common problem was
lack of experience in the staff, reported by 34%. Only 8% reported "lack of internal training and
development of staff" and only 5% reported "inability of workforce to keep up with change".
Figure A2 shows the skills that firms reported were most in need of improvement among their
staff. Customer service and sales was the most common skill reported under this heading (26%)
followed by team working and oral communication (both 21%). All of the predetermined categories
appear to be an issue, however, with even the lowest of the categories (marketing) being indicated by
11% of the sample.
Table A1 reports the involvement of firms in training their staff in the previous financial year. As
a general trend, firms were likely to training new staff members. A smaller percentage reported
training staff for new roles, while the percentage training all existing staff for existing roles was lower
again.
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82 – APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING
Figure A1.
Factors resulting in staff not having all the skills to do their job, firms with 6-99 employees
(%)
Lack of experience
34
Lack of motivation
16
Recruitment problems
14
Scope of job increasing
12
High staff turnover
11
Lack of internal training
8
Lack of ability of staff
5
0
10
20
30
40
Source: BOS 2008, Table 45.
Figure A2.
Skills that existing staff most need to improve firms with 6-99 employees (%)
Customer service/sales
26
Team working
21
Oral communication
21
Management/supervisory
18
Trade related
18
Computer
16
Written communication
15
Professional/technical
12
Numeracy
12
Marketing
11
0
10
20
30
40
Source: BOS 2008, Table 46.
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APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING – 83
Table A1. Involvement of firms in training staff in the previous financial year
Area of Training
Less than Half
Half or More
All Staff
6-19 employees
8%
11%
48%
20-49 employees
10%
11%
61%
50-99 employees
11%
17%
65%
6-19 employees
12%
10%
21%
20-49 employees
18%
16%
30%
50-99 employees
21%
24%
37%
6-19 employees
23%
22%
28%
20-49 employees
33%
25%
26%
50-99 employees
41%
32%
19%
New Staff
Existing Staff Changing Roles
Existing Staff for Existing Roles
Source: BOS 2008, Table 47.
Figure A3.
Staff training for skills in the previous financial year, firms with 6-99 employees (%)
Trade related
42
Computer
35
Customer service/sales
34
Professional/technical
31
Team working
30
Management/supervisory
26
Oral communication
16
Marketing
14
Written communication
12
Numeracy
11
0
10
20
30
40
50
Source: BOS 2008, Table 48.
Figure A3 reports the results of a question: During the last financial year, did this business’s staff
participate in the following types of training provided or funded by this business? Trade related skills
were the most common type of training reported (42%). The least common types of training reported
by business were numeracy (11%) and written communication (12%).
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84 – APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING
The second source of national data is the semi-regular Skills and Training Survey operated by
Business NZ, recently in conjunction with the Industry Training Federation (ITF). The 2007 version
of the Survey was website-based and distributed through the four regional business organisations of
Business NZ (EMA Northern, EMA Central, the Canterbury Employers’ Chamber of Commerce and
the Otago Southland Employers’ Association) and through affiliated industry associations. The results
of the survey are reported in a publication by Nicholas Green, Nicholas Huntington and Stephen
Summers, Skills and Training Survey 2007: Full Report, published in July 2008 by Business NZ and
ITF.
The 2007 survey drew responses from 536 enterprises. Note that these were not limited to SMEs,
and 15% employed more than 100 staff. Just less than two-thirds (65%) of respondents were private
limited liability companies. A further 8.6% were self-employed or sole proprietors and 68% of
respondents had been in operation for longer than 10 years. 90% of firms that responded to the survey
had provided some form of training to their staff in the previous two years. 44% of firms had
increased the numbers of employees receiving training over that period and only 5% had reduced
training numbers.
Smaller firms were less likely to provide training to their staff – 72% of firms with 0-5 employees
reported providing training, compared to 100% of firms with 100 or more staff. The median amount
of training provided per employee was two days, which was lower than in the previous survey (in
2003, which reported a median of three days). However, the median amount of payroll costs spent by
firms on training increased from 2.0% in 2003 to 2.5% in 2007.
Table A2 reports the skills identified as most important in the respondent’s enterprise. Specific
technical and trade skills stands out in this list: 43.9% of respondents identified it as the most
important skill required, and 70.8% listed in among their top three. Communication skills, and literacy
and numeracy skills, were the next two most cited skill sets, with a reasonable gap to the rest of the
list.
Table A3 compares the forms of training offered in 2007 compared to the 2003 survey. There is a
noticeable decline in the numbers reporting training in the more recent year. This decline is also
reflected in Table A4, which compares the numbers reporting training in different skill types, with the
most notable decline being in supervisory training.
Comparing Tables A2 and A4, there were some interesting differences in the 2007 responses
between the types of training respondents reported providing and the skills identified as important to
their enterprise. While almost 50% of respondents identified literacy and numeracy as important, for
example, only 9% offered or supported training in this area. Conversely, 43% offered or supported
training in computing/ICT, although only 22% identified it as one of the three most important skills
for their enterprise.
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APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING – 85
Table A2. Three most important skills for respondent’s enterprise (% of respondents)
Ranking of Importance
1
2
3
Overall
Frequency
Specific Technical and Trade Skills
43.9%
15.0%
12.3%
70.8%
Literacy and Numeracy Skills
19.0%
16.7%
14.1%
49.3%
Communication Skills
18.9%
28.0%
20.4%
66.7%
Management Skills
6.4%
8.1%
10.6%
24.9%
Health and Safety Skills
4.0%
6.3%
7.1%
17.1%
Team and Negotiation Skills
3.0%
11.2%
14.5%
28.3%
Other Skills
2.8%
3.0%
2.5%
8.3%
Computing/ICT Skills
1.3%
8.5%
12.7%
22.2%
Supervisory Skills
0.8%
3.2%
5.8%
9.6%
Skills
Source: Skills and Training Survey, 2007, Table 1.
Table A3. Forms of training offered or supported, 2003 and 2007
(% of respondents)
Forms of Training
2003
2007
External courses and programmes
85.8%
73.1%
In-house training programmes
79.4%
60.6%
Conferences
47.6%
One-off seminars
67.1%
Induction
72.5%
50.4%
Other
3.8%
7.3%
51.7%
Source: Skills and Training Survey, 2007, Table 13.
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
86 – APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING
Table A4. Types of skills training offered or supported, 2003 and 2007
(% of respondents)
Forms of Training
2003
2007
Specific Technical and Trade Skills
83.5%
72.8%
Health and Safety Skills
77.6%
54.1%
Computing/ICT Skills
61.6%
42.9%
Management Skills
53.6%
40.1%
Communication Skills
44.2%
38.8%
Team and Negotiation Skills
40.0%
32.1%
Supervisory Skills
50.4%
31.7%
Literacy and Numeracy Skills
10.8%
8.8%
Other Skills
9.6%
8.2%
Source: Skills and Training Survey, 2007, Table 14.
Figure A4.
Providers of training used by respondents
(% of respondents)
In-house line staff
56
Private trainers
54
Industry Training Org.
52
Business NZ Org.
35
Polytechnic
26
In-house trainers
23
University
18
Modern Appr. Coord.
16
Other
12
0
10
20
30
40
50
60
Source: Skills and Training Survey, 2007, Table 16.
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APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING – 87
Figure A4 shows the sources of training. The top three sources were in-house line staff (e.g.
supervisors), private training consultants or providers, or through Industry Training Organisations.
The survey defined formal training as training that is assessed in some way. Table A5 presents the
percentage of respondents who indicated their proportion of formal training analysed in ten
percentage point bands. The largest group of respondents (17.0%) used formal training for half of all
their training efforts. Nevertheless, the responses were weighted towards informal training, with just
under half reporting that they used formal training for only 0-30% of their total training.
Table A5. Proportion of training that is formal (i.e. assessed), 2007
Percentage Band
Number of Respondents
Percentage of Respondents
0%
63
14.3%
1-10%
60
13.6%
11-20%
49
11.1%
21-30%
43
9.7%
31-40%
29
6.6%
41-50%
75
17.0%
51-60%
25
5.7%
61-70%
22
5.0%
71-80%
38
8.6%
81-90%
19
4.3%
91-100%
19
4.3%
Total
442
100%
Source: Skills and Training Survey, 2007, Table 19.
Finally, Table A6 gives an indication of barriers to training by showing the responses to a
questions asking for the three most important reasons for supporting less or no training. Affordability
of training was the most cited first reason, by a factor greater than two compared to the next most
cited first reason (not enough relevant training). There was little support for the view that training is
an employee’s responsibility (2.1% overall), although 28.9% cited lack of employee interest as one of
their top three reasons. High staff turnover or a fear that a trained employee might be poached by a
competitor were also well done the list (both 11.7% overall).
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88 – APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING
Table A6. Three most important reasons for supporting less or no training
(% of respondents)
Ranking of Importance
1
2
3
Overall
Frequency
Affordability of training
28.9%
–
13.6%
39.7%
Not enough relevant training
13.0%
9.3%
14.1%
32.6%
Lack of information about training
5.4%
23.8%
6.3%
31.8%
Requires too much staff time off work
7.9%
11.7%
16.2%
31.4%
Lack of interest from employees
11.7%
12.6%
7.3%
28.9%
Decline or uncertainty in business
environment
5.9%
7.5%
11.0%
21.3%
Can’t assess the likely benefit
3.8%
6.5%
9.4%
17.2%
“Red tape” involved in arranging training
5.4%
6.5%
5.2%
15.5%
High staff turnover in the enterprise
4.6%
4.7%
3.7%
11.7%
Trained employees will be "poached"
2.9%
5.1%
5.2%
11.7%
High availability of suitably skilled labour in
the industry
5.0%
4.2%
1.6%
10.0%
Other reason
4.6%
2.8%
3.7%
10.0%
Too difficult to train employees
0.8%
3.3%
2.1%
5.4%
–
1.9%
0.5%
2.1%
Reason
Training is an employee’s responsibility
Source: Skills and Training Survey, 2007, Table 25.
Table A7 lists the participants in the workshop, and also indicates what part of the regional
training ecosystem they represented.
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APPENDIX: NATIONAL DATA ON ENTERPRISE TRAINING – 89
Table A7. Participants in the skills and training ecosystem workshop
Participants
Organisation
International
Sylvain Giguère
Cristina Martinez-Fernandez
Tamara Weyman
CFE/LEED, OECD
CFE/LEED, OECD
University of Western Sydney
National Policy
Paul Barker
Liz Cowley
Olga Gladkikh
Daniel Haines
Department of Labour
Department of Labour
Tertiary Education Commission
Tertiary Education Commission
Regional Policy
Jo Aldridge
Claire Bryant
Darel Hall
Paul Isherwood
Irvine Paulin
Ministry of Social Development
Department of Labour
Policy Consultant
Workbridge
New Zealand Trade and Enterprise
Employers
Paul Blackler
Heather McDonald
Carrie Murdoch
Peter Townsend
John Tyler
Mainzeal Property and Construction
Athena Research Ltd
Business New Zealand
Canterbury Employers Chamber of Commerce
Bowls Canterbury Inc
Trade Unions
Murray Kerse
New Zealand Dairy Workers Union
Industry Training Organisations
Andrea Frost
Mike Gorinski
Liz Stephenson
Mike Webster
Industry Training Federation
Apparel and Textiles Industry Training Organisation
Careerforce
Electricity Supply Industry Training Organisation
Private Training Enterprises
Tony Atkin
Ian Douthwaite
Christina Fawcett
Andrew Murray
Alliance Learning
going places
National Trade Academy
Academy New Zealand
Public Education
Gay Sharlotte
Claire Taylor
Russel Wordsworth
Christchurch Polytechnic Institute of Technology
Hagley Community College
University of Canterbury
Local Government
Cat Hannah
Lesley Symington
Heather Warwick
Simon Worthington
Enterprise North Canterbury
Selwyn District Council
Enterprise North Canterbury
Canterbury Development Corporation
Project Research Team
Paul Dalziel
Meike Guenther
AERU, Lincoln University
AERU, Lincoln University
LEVERAGING TRAINING: SKILLS DEVELOPMENT IN SMES, NEW ZEALAND © OECD 2010
Leveraging Training
Skills Development in SMEs
The leveraging training and skills development in SMEs project is an international
effort to look at policy issues related to the:
• Low access to training in SMEs
• Barriers encountered by SMEs to training
• Formal and informal ways SMEs access knowledge that is relevant for their
business operations.
The project examines how formal and alternative ways of training and skills
development relate to specific outputs for the firm and employees, for the
industry and for the local area where they are located. In particular the role of
skills and training ecosystems at the local level is analysed.
Participant countries: New Zealand, United Kingdom, Poland, Belgium (Flanders)
& Turkey. The project is supported by: the European Commission, DG
Employment, Social Affairs and Equal Opportunities.